With the second round of renewed peace talks set to resume this week, the Israeli-Palestinian Conflict is topping global headlines yet again. Concerned international actors, and the media, analyze each action taken by the negotiating sides for its potential influence on the long-awaited peace deal. With controversial decisions leading into this week’s round of negotiations, including the release of Palestinian prisoners and the approval of further settlement expansion, hopes are not high for the peace talks’ outcome. However, while the politicians discuss these high profile peace efforts there are smaller scale Israeli-Palestinian cooperative interactions going on, as well. Instead of being motivated by peace however, these are motivated by the economy.
As the so-called Start-Up Nation, Israel has become well known for its powerful and innovative high-tech economy. The small country of just seven million managed to perform an economic development miracle in establishing a world leading Information and Communications Technologies (ICT) sector. As the Israeli ICT industry grew and attracted investment from major multi-nationals, it was only a matter of time before those same multi-nationals looked to expand: in 2008 Cisco wondered about the potential to expand their Israeli operation to the West Bank.
Nowadays, Cisco is not alone in looking to the West Bank as a possible new market for the ICT industry. While originally private-sector interests drove investment in the Palestinian high-tech sector, these efforts are now focusing on a range of diverse benefits. In just a few years the Palestinian ICT sector has become the concentration of cooperative efforts between international development organizations, local and international private sector organizations, as well as the Palestinian Authority. The goal no longer remains at simple market expansion, but instead comprehensive socio-economic development of the West Bank through the building of an ICT industry. This initiative also has a secondary benefit: it is sparking some of the most productive Israeli-Palestinian collaboration seen today.
Facilitated by programs and projects organized in part by development organizations, like Mercy Corp, and multinationals, like Cisco, Palestinians are participating in training and capacity building exercises to improve and develop the local ICT sector. Following these capacity building programs, Palestinian companies have established solid foundation and begun to explore the regional market, including in their work for and in unison with their Israeli counterparts. These market collaborations stem from mutual benefits derived from the partnerships. Israel benefits from utilizing a highly skilled, yet comparatively cheap labor force, while also gaining potential access to the emerging greater Arab ICT market. Comparatively, Palestinian firms and employees gain exposure to and experience in the international market regionally and globally.
Limited to outsourcing projects and basic services for the time being, due to size and capacity, proponents of further developing an ICT sector in the West Bank look to harness existing comparative advantages in order to succeed. Many of the guidelines for pursuing a high-tech economy in the West Bank are similar to those cited in the Israeli case, as well. A limited ability to economically engage with the surrounding region led Israel to develop an information- and technology-based economy. In a similarly isolated situation, the West Bank demonstrates potential to nullify border issues through the utilization of a service- and knowledge-based high-tech economy.
Additionally, the comparative advantages noted in the Israeli case included a young, educated, and technology literate population. With the highest college graduation rates in the Arab world, and a demographically young population, the West Bank presents a strong base for knowledge-based industries. Furthermore, the Palestinian student body has adopted a focus on high-tech subjects, with 2,500 graduating in computer science each year. Statistics like these, and the rise of the ICT sector from 1% (2008) to 8% (2011) of the Palestinian GDP, demonstrate an optimistic view of future economic growth in the West Bank. However the road to true development via an established ICT sector faces challenges as well, including those influenced by the outcome of this week’s peace negotiations.