Economics of reconciliation : possibilities and hindrances for Palestine to learn from Israel

Abstract

With per capita GDP ca. $1,500 and 20% poverty rate, Palestine is desperately in need of growth and development. In the global competition for investments, Palestine trails because of political unrest, low infrastructure, lack of natural resources and relatively high wages. But it has an asset no other poor country has: intimate economic linkage to its strong and advanced neighbour, Israel. Israeli know-how can endow Palestine with advanced human resources that will make it an attractive location for hi-tech investments. Alas, after 100 years of hostility, Palestinians are reluctant to utilize this source. Where a strategic national plan for knowledge transfer is necessary, Palestinian government can at best be expected not to disturb. But plenty of organizations on both sides cooperate successfully. Their separate efforts should be centrally coordinated, for a fast massive transfer of Israeli knowledge, while circumventing sentiments of pride and hostility.