A Very Interesting Study

I came across a very interesting study this morning on my train ride into school (I just got a smartphone, and it has made my train rides much more enjoyable), and I have not yet been able to wrap my head around its implications. The study was conducted by Issa Smeirat as part of his master’s thesis at Al-Quds University in Abu Dis. Essentially, Smeirat found that Palestinians are investing significantly more in Israel, compared the territories governed by the Palestinian Authority.

The numbers are quite staggering. Upwards of $5.8 billion from private Palestinian investors was invested in Israel while only $1.5 billion was invested in the territories controlled by the Palestinian Authority. Given the current economic relationship between the Palestinian Authority and Israel, if yesterday I were asked to guess the level of Palestinian private investment in Israel, I would have guessed that it was a negligible amount, and never would I have dreamed that it was $2.5 billion based on a conservative estimate when investment in Palestinian territories is a paltry $1.5 billion. Smeirat estimates that if the $2.5 billion were invested in Palestinian territories it could have created 213,000 jobs for Palestinians.

On a cursory glance, Smeirat’s study seems to follow the appropriate scientific standards and methods. His sample size was large, his investigation was thorough, and objectiveness seemed to rule the day. I have to believe its findings are accurate.

As to the specific procedure, according to the article, Smeriat “received basic information about the investors with entry permits to Israel from the West Bank governorates and contacted 540 of them directly. He handed out detailed questionnaires to 420 of them (to which 374 responded) and also met with 120 for individual interviews.” As well, he gathered data from records kept by the PA, and found that “in the Palestinian areas of the West Bank, some 16,000 Palestinian businessmen from the West Bank, recipients of permanent permits to enter Israel, have founded companies and various kinds of factories in Israel and in the industrial zones of Jewish settlements in the West Bank, and pay taxes to the treasury of Israel.”

The entire study is profoundly interesting, but specifically, I am utterly astonished by a couple of its findings. First of all, when Smeirat asked the subjects of his study whether they would want to go back and invest in the areas of the West Bank “35.3 percent of his respondents replied in the negative [emphasis added for effect], 28.9 percent said they would go back if the PA manages the economy better, and 35.8 percent said they would go back if conditions were improved (such as better infrastructure and loans).” Secondly, one-fifth (again, emphasis added for effect) of the respondents to Smeirat’s study said they invested only in Israel and the settlements. Third, Smeirat’s sample showed an inverse relationship between educational level and investment in Israel, meaning the more educated Palestinians are less likely to invest in Israel.

The potential implications of the study are immense. Consequently, at this point I feel am in no position to try and explain it. Obviously, the economic environment in Israel is much better suited for foreign investment compared to the territories controlled by the PA due to a whole host of reasons about which debate is warranted, but is that enough to explain these staggering results? The one thing that I am willing to say for certain at this point is that I will be following the scholarship in this area very closely.

One comment

  1. Perhaps many of these investors are more concerned with financial stability than their personal and political feelings towards Israel. Many may simply feel unwilling to invest their fortunes in places controlled by the PA due to the instability in those areas. Certainly many Palestinians would have feelings towards Israel that would make them incapable of investing there, but it appears that this is not the rational of many. One would think that Palestinians would want to see the land controlled by the PA grow and prosper and invest heavily there. My only hypothesis as to why this is not the case is the issue of financial stability and not wanting to risk one’s money in an unstable economy. The PA would benefit greatly from more investment in its lands, but if Palestinians themselves are not investing, who will? Whatever the reasons are, this investment pattern is intriguing and hopefully more studies will be performed that get at the roots of why Palestinians are investing in such a manner.

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