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30 September 1993
DEVELOPING THE OCCUPIED TERRITORIES
AN INVESTMENT IN PEACE
Volume IV: Private Sector Development
The World Bank
Copyright (c) 1993
The International Bank for Reconstruction and Development/THE
1818 H Street, N.W.
Washington, D.C. 20433, U.S.A.
All rights reserved
Manufactured in the United States of America
First printing September 1993
Second printing October 1993
The six-volume series,
Developing the Occupied Territories: An Investment in Peace,
is published to communicate the results of the Bank's work to the development community with the least possible delay. The typescript of this paper therefore has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors.
This paper has been prepared by staff of the World Bank and should not be attributed in any manner to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. Any maps that accompany the text have been prepared solely for the convenience of readers; the designations and presentation of material in them do not imply the expression of any opinion whatsoever on the part of the World Bank, its affiliates, or its Board or member countries concerning the legal status of any country, territory, city, or area or of the authorities thereof or concerning the delimitation of its boundaries or its national affiliation.
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Index of Publications,
which contains an alphabetical title list (with full ordering information) and indexes of subjects, authors, and countries and regions. The latest edition is available free of charge from the Distribution Unit, Office of the Publisher, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from Publications, The World Bank, 66, avenue d'Iéna, 75116 Paris, France.
ISBN 0-8213-2694-5 (6-vol. set)
Preface - vii-ix
Executive Summary - x-xxiii
I. The Importance of the Agricultural Sector - 1
Agricultural Share of GDP - 1
Agricultural Income - 2
Food Consumption and Self-Sufficiency in the OT - 3
II. Sectoral Resource Base and Competitiveness - 5
Natural Resource Use - 5
Competitiveness - 6
Productivity - 8
III. Key Determinants of Sector Performance - 11
Markets - 11
Local Markets - 11
Export Markets - 12
Agricultural Technology - 15
Agricultural Supporting Services - 16
Policy - 16
The Institutional Framework of the Public Sector - 17
The Regulatory Environment - 17
Cooperatives - 17
Agricultural Credit - 18
Access to Natural Resources - 19
Land - 20
Water - 20
Employment and Labor Productivity - 22
IV. Future Outlook and Strategy - 25
Future Prospects - 25
Elements of a Strategy for Agricultural Development - 25
Trade - 27
Legal and Regulatory Framework - 29
Management of Natural Resources - 29
Public Sector Support Services - 30
V. Agenda for Technical Assistance and Investment - 33
Technical Assistance - 33
Immediate Future - 33
The Interim Period - 34
Investment - 35
Annex 1: Agricultural Systems - 36
Area - 36
Farm Population Distribution and Farm Structure - 36
Agro-ecological Zones - 36
Typical Cropping Patterns - 37
Level of Technology - 37
Individual Crops - 38
Citrus - 38
Vegetables - 39
Other Irrigated Crops -40
Olives - 40
Field Crops - 41
Other Rain-fed Crops - 41
Animal Husbandry - 42
Fisheries - 43
Forestry/Land Reclamation - 44
Agro-industry - 45
The Public Sector - 46
Agricultural Extension - 47
Research - 49
Agricultural Education - 49
Agricultural Credit - 50
Annex 2: Water and Irrigation - 52
Climatic Conditions - 52
Surface Water - 52
Groundwater - 53
Current Water Use - 53
Irrigated Area - 54
Irrigation Techniques - 55
Institutional Arrangements - 55
Waste Water - 56
Annex 3: Agriculture in Israel - 57
Annex 4: Statistical Supplement - 60
Selected Bibliography of Consulted Sources - 90
Maps: Occupied Territories and Land Utilization
1. At the request of the sponsors and organizers of the Middle East Peace Talks, the World Bank has been supporting the work of the Multilateral Working Group on Economic Development by providing analyses of the key economic issues and developmental challenges facing the Middle East region. At its second meeting in Paris in October 1992, the Working Group requested the Bank to expand its contribution to include,
an assessment of the development needs and prospects of the economies of the West Bank and the Gaza Strip (commonly referred to as the Occupied Territories). In response to this request, a Bank mission visited the Occupied Territories during the period January 21-February 24, 1993. The mission comprised five teams focusing on the following areas: Private Sector Development, Agriculture, Human Resources, Infrastructure and Macroeconomics. Each team was in the field for about two weeks. The mission was led by Prem Garg who, together with Samir El-Khouri, stayed in the field throughout to provide continuity and guidance to the five teams. The staffing of the five teams was as follows:
Gert van Santen (Team Leader)
Ulrich Kuffner (Water Resource Engineer)
/ (Horticulture Specialist)
Fredrick Golladay (Team Leader)
/ (Education Specialist)
Radwan Ali Shaban
/ (Human Resource Economist)
Alastair McKechnie (Team Leader)
Ulrich Kuffner (Water Resource Engineer)
Lawrence Hannah (Urban Specialist)
Nail Cengiz Yucel (Transport Sector Specialist)
/ (Power Engineer)
Michael Walton (Team Leader)
Samir El-Khouri (Fiscal Analyst)
Ishac Diwan (Macroeconomist)
Private Sector Development:
Albert Martinez (Team Leader)
Robert Mertz (Financial Sector Specialist)
Joseph Saba (Legal Specialist)
/ (Regulatory Environment and Tourism Specialist)
2. Mission members travelled extensively in the West Bank and Gaza, visiting municipalities, farms, businesses, industries, academic institutions, refugee camps and NGO-run facilities. Mission members also travelled in Israel, as needed, and paid several visits to Amman. The representatives of the key bilateral and multilateral donors in Jerusalem, Tel Aviv and Amman responsible for the Occupied Territories were kept briefed about the work of the mission. Close contact was also maintained with the field staff of UN agencies.
3. The Bank mission was received warmly by all sides, who took keen interest in the work of the mission and provided superb logistical and counterpart support for the field work. The main counterparts on the Israeli side were the Bank of Israel and the Civil Administration in charge of the Occupied Territories. On the Palestinian side, the main counterparts were the Technical Committees of the Palestinian Team to the Peace Conference, consisting mainly of Palestinians who are members of the bilateral or multilateral peace teams. The Ministry of Planning was the main contact on the Jordanian side. The Bank would like to thank all concerned parties, especially the Israeli, Jordanian and Palestinian hosts, for the excellent support and cooperation that the Bank mission received for this field work.
4. This report is based on the findings of the above mission. This report is in six volumes:
provides a summary
of the key findings and recommendations of the study. After commenting selectively on the current socioeconomic situation in the OT and its evolution over time, it discusses prospects for sustainable development in the future and outlines the priority agenda of policies and programs needed to promote such development.
explores the strategic choices at the
level that will be faced by the OT in the future and the implications for economic relations between the OT and the rest of the region. The study looks at the current situation and its evolution over the past 25 years. The study then examines several policy choices for the future affecting the structure of development in the OT. Finally, it outlines some illustrative scenarios for the future, focussing on the consequences of current developments in the region.
reviews the performance of the
(including, in particular, the industry and tourism sectors) in the OT. The study assesses the environment in which the private sector operates and its future prospects and makes recommendations for accelerating private sector development in the future.
reviews the evolution and structure of the
sector in the OT; analyzes its current characteristics; assesses OT competitiveness in the immediate and longer term; outlines the main policy options and their implications; and provides a preliminary assessment of sectoral financial and technical assistance (TA) needs.
assesses the current situation in the
sectors (electricity, water supply and sanitation, transport, housing and solid waste services) in the OT; identifies the major issues confronting these sectors; and outlines priorities for TA and investment needs. As local authorities are major institutions in the delivery of public services in these sectors, the study also includes a review of their current situation and makes recommendations for improving the functioning of municipalities.
reviews the current status as regards
development; analyzes options for enhancing individual welfare and labor productivity in the OT; and outlines investment and TA priorities for strengthening existing programs and for laying the foundation for later reforms.
5. It is worth highlighting two limitations of this study right at the outset. First, a number of key issues bearing upon the future development of the OT (e.g., the allocation of land and water resources, the disposition of Israeli settlements in the OT, the future status of expatriate Palestinians, the territorial issues surrounding Jerusalem and, most importantly, the nature of the proposed "self-governing" arrangements for the OT) are the subject of ongoing bilateral negotiations between the Israelis and the Palestinians. The resolution of these issues is likely to be based primarily on political and security considerations. As the Bank mission to the OT was a
, with neither the mandate nor the expertise to deal with political or security aspects, this study does not take any positions on issues that are on the agenda for bilateral negotiations. The focus instead is on policies, institutions and investments - where optimal choices are largely invariant to the eventual political arrangements to be agreed at the bilateral negotiations. Thus, for example, while analysing, where appropriate, the economic links between East Jerusalem and the West Bank and Gaza, the report avoids making any judgements regarding the future status of East Jerusalem.
6. Second, the study has had to cope with very serious
data gaps and inconsistencies
. Much of the data on the OT are, directly or indirectly, from official Israeli sources. There are, however, serious gaps in the OT data base. A population census has not been carried out in the OT for more than 25 years. As a result, most of the demographic and labor force data are based on extrapolations and on sample surveys, the reliability of which are undermined by problems of nonresponse, especially since the onset of the
(popular uprising) in 1987. Data on East Jerusalem and on Israeli settlements in the OT, both of which are treated as part of Israel by the official Israeli sources, are mostly unavailable. Data available on trade between the OT and Israel and on the profitability and competitiveness of the agricultural, industrial and service enterprises are also very limited. Data on the OT from Palestinian and Israeli nonofficial sources are sparse and selective. Also, Palestinian data, when they exist, are often based on
surveys that do not lend themselves easily to cross-sectional or longitudinal comparisons. In many instances, data differ between sources, and, even when the same source is used, there are gaps and apparent inconsistencies. Given these data problems, the report uses estimates that appear most plausible in light of the mission's field observations. In cases where the data differences among various sources are particularly sharp (e.g., population, unemployment and social indicators), the report attempts, where possible, to examine the reasons for these differences and to indicate the implications of alternative estimates for the results of the analysis.
7. In view of the limitations on the mission mandate, the data difficulties and the time and resource constraints, this study can only be considered a beginning. The analysis in the study, especially for the longer term, is necessarily incomplete; as, and when, progress is made in the bilateral negotiations, the study will need to be updated and expanded to take account of the agreements reached. Also, notwithstanding the care exercised in locating and interpreting the data from various sources, the empirical underpinnings of this study leave something to be desired, and, therefore, the conclusions of the study should be treated only as indicative of broad trends and priorities. Further, in-depth studies and project feasibility work will be required before the findings of this report could be used to make operational decisions.
8. An earlier draft of this report was discussed with the Israeli, Jordanian and Palestinian authorities by a Bank mission to the region during July 12-26, 1993. Where appropriate, the report has been revised to incorporate the comments received by the mission during the July discussions.
/ Bank consultant.
1. The agricultural sector in the Occupied Territories (OT) has historically played a major role in the economy. This study aims at assessing the prospects for sustainable development of the sector, as well as to outline the priority agenda of policy adjustments, institutional development and investments needed to promote such development.
2. In this study data are quoted from the Civil Administration (CA) and the Central Bureau of Statistics( CBS),or from reports prepared by Palestinian institutions or authors, who often have used data from the CA and CBS. Various Palestinian groups and research institutes have also contributed data. In many instances, data differ between sources, and, even when the same source is used, there are gaps and apparent inconsistencies. The report uses estimates that appear plausible in the light of the mission's field observations, based on information from official and informal sources.
3. This report consists of three parts. This executive summary and synthesis is followed by the main report, which reviews the evolution and structure of the sector, analyzes its current characteristics and constraints, and assesses the competitiveness of OT agriculture. It outlines the main policy options for future sectoral development, and provides a preliminary assessment of sectoral financial and technical assistance needs. The Technical and Statistical Annexes provide a technical analysis of crop production and sector support systems, key inputs and markets, followed by statistics.
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