The Palestinian Population in Israel at the Margins of the Israeli Economy

Factors and Obstacles Impeding Development of the Food Industry at Palestinian Localities in Israel

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This abstract introduces an IDI study of economic development initiatives in Palestinian localities in Israel. The study focused on entrepreneurship, especially in the local food industry, and encourages more comprehensive research on entrepreneurship in Palestinian society in Israel.

The complex relations obtaining between the Jewish and Palestinian populations in Israel have been researched in a broad range of studies (Gabison and Hacker 2000; Khamaisi 2003; Haider 2009;) that depict the Jewish group as dominant, controlling territory and resources, while the Palestinians in Israel are presented as a marginal minority group, especially from an economic point of view. According to Zalika (2009), their exclusion is reflected in their underrepresentation in industry, especially hi-tech industries of great importance to the Israeli economy.

Several studies have indicated that the Palestinian economy has failed to develop, noting its weakness in terms of occupational characteristics, spheres of activity and scope (Zureik 1979; Haider 2009). Others addressed the marginality of the Palestinian economy in Israel relative to the national economy, asserting that two separate economic entities have emerged in the same country: a Jewish economy and a Palestinian economy (Haider 2005; Shihadeh 2006), with widening gaps in terms of occupation, education, and technological competence (Semyonov and Lewin-Epstein 2004; Haider 2009). Recently, the non-integration of Palestinian citizens of Israel in the national economy aroused extensive public and academic reactions, as the parties involved—government officials, members of civilian social organizations, researchers and business persons—became more aware of the heavy economic and social price this situation exacts. The Israeli economy loses about NIS 25 billion annually, as reflected in its GNP, as a result of failure to use the potential of its Palestinian population, especially its work force (Fars 2009; Sadan and Halabi 2009).

This study reviews economic development initiatives at Palestinian localities in Israel in an attempt to understand the factors behind this situation. It constitutes the result of comprehensive research on entrepreneurship, especially in the local food industry, based on the assumption that a particular ethnic group will maintain an advantage in an ethnic industry. Few entrepreneurship studies have been conducted at Palestinian localities in Israel and all available statistics relate to the 1990s at the latest. This study will provide considerable insight into food industry entrepreneurship and encourage more comprehensive research on entrepreneurship in Palestinian society in Israel. Future studies will shed additional light on Palestinian entrepreneurship in Israel today and propose means of leveraging such businesses as a spur to the local Palestinian economy and the Israeli economy as a whole.


  1. What prevents Palestinian society in Israel, as an ethnic minority, from penetrating and integrating within the Israeli national market?
  2. Are the factors retarding development intrinsic to and dependent on the structure and culture of Palestinian society in Israel or are they external, the result of long-term government policies concerning this population sector?
  3. What are the chief factors and obstacles impeding the development of food industries at Palestinian localities in Israel?

As indicated, the decision to focus on food industries was motivated by the assumption that the relevant ethnic population groups will have something special and different to offer the Israeli market with regard to Middle Eastern food production. Concentrating research on this field will enable assessment of entrepreneurship in an industry unhampered by quality control issues, enabling us to posit that the factors sought are inherent in other variables that the study will attempt to examine.

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