Performance Analysis of Small-scale Industries: Evidence from Gaza Strip

From 1967 until the peace treaty in 1993 and the economic accord in (Paris, 1994), the economy of the occupied territories (OT) faces a lot of Israeli control and constraints that led the Palestinian economy into a dependent economy. It was unstable and imbalance economy, because of the Israeli policy that had been designed to prevent any real development in the occupied areas. After the peace treaty and the establishing of the new Palestinian entity (NPE), a case of stagflation appear. In the OT, the Palestinians face problems of high unemployment, and at the same time inflation and high price level with low income. This happens because; the economy in the OT could not live independently after the long period of occupation. The strong limitations in freedom of movement of people and goods, not only to Israel and international markets but also between the West Bank and the Gaza Strip, even after the establishing of the NPE, are other important causes of the stagnation in the NPE. The comprehensive closure is also other reason for the current situation. The industry in the Strip faces many obstacles. Dependency on the Israeli firms, the dominant of subcontracting agreement, smallness in employment size or total capital, lack of raw materials and external finance due to the absence of Palestinian banking system, and lack of the markets because of low income, small area. Constraint on exports and imports and the need for the license from Israeli authority, frequent closure and unstable political situation are other examples1