Dutch Disease, Palestinian Economy, One Gap Economy, Foreign Aid


The Palestinian economy is primarily affected by internal and external exogenous political constraints, structural limitations and foreign aid, rather than by endogenous economic free market factors. Underemployment of labor and limited viable opportunities for capital are largely due to limitations on exports and the free flow of goods, services and labor that are imposed by Israel and other neighboring countries, as well as on the shortage of arable land and water. Through theoretical considerations and empirical investigation, this paper claims that the constraints on the Palestinian economy as well as foreign aid result in the symptoms associated with an economy infected by Dutch Disease

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