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Investment Climate in Palestine


Palestine is a market-based economy with tremendous investment potential. Though the Palestinian economy faces clear challenges, especially since 2000, it also has many advantages, including a forward-thinking, entrepreneurial, and talented private sector, and a rapidly growing and well-educated labor force.

The Palestinian business community is largely entrepreneurial in nature, with local businesses that aspire to a high-level of professionalism and product quality. Large enterprises are internationally connected, with partnerships extending to Europe, the Gulf, and North America.

The wealth of human capital is a valuable asset to the Palestinian economy. With a very young population, the work force is expected to expand significantly over the next several decades. This labor force is highly educated, multilingual, and well versed in the technologies and practices conducive to doing business on a global level.

In addition to future growth, Palestine already boasts a multitude of promising economic sectors ready for investment. The services sector, with the sub-sectors internal trade, transportation, tourism, and information technology, is rapidly expanding. The construction, manufacturing and mining, and chemical industries sectors are also thriving and promise fruitful investment opportunities.

At the Paris Donor’s Conference in December 2007, the international community pledged $7.7 billion in support of the Palestinian National Authority’s (PNA) Palestinian Reform and Development Plan (PDRP). The PRDP aims “to facilitate the prioritization and harmonization of policies, plans and resource allocation, and to encourage fiscal discipline.” This renewed international support for the PNA will eventually help improve the investment climate in Palestine and mobilize both local and international investment in the Palestinian private sector.

The PNA has also taken steps to facilitate and increase foreign trade by signing free trade agreements with the European Union, the European Free Trade Association (EFTA), the United States, Canada, and Turkey. The PNA has finalized other trade agreements with Russia, Jordan, Egypt, the Gulf States, Morocco, and Tunisia.

The diversification of the Palestinian economy and the improvement of the investment climate, which already attracts important business leaders from across the globe, are testaments to the resourcefulness and creativity of the Palestinian people. They also reflect a global commitment to a region determined to achieve stability and prosperity.

Sources: The Palestine Economic Policy Research Institute (MAS): Investment Guide to Palestine 2008; Palestine Investment Promotion Agency (PIPA); The Palestine Reform and Development Plan (Paris Donor’s Conference paper)

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