Latest News

OQR-PalTrade Study on Industrial Sectors in Gaza

The Office of the Quartet Representative (OQR) commissioned PalTrade, a Palestinian trade and research organization, to conduct a study tracking changes in major industrial sectors in Gaza following the Government of Israel’s decision in mid-2010 to ease economic restrictions on the Gaza Strip. The study consists of three bimonthly surveys examining business indicators covering sales, employment, capacity utilization and export readiness from January to June, 2011. These indicators are also compared against reported figures for previous years. A brief note will outline the key results of each bimonthly survey. A comprehensive report detailing the key business changes since 2005 will be prepared at the end of the survey period in June, 2011.  The World Bank also participated in technical discussions on the design of the study.

Sample of Companies – PalTrade randomly selected a sample of 188 manufacturing companies from eleven key industrial sectors in Gaza. The survey sample was restricted to companies employing five employees or more and operating at 20 percent capacity utilization or more.  The motivation for choosing only larger and stronger manufacturing companies in just eleven sectors was to focus the analysis on companies with greater productive capacity and export potential. The agricultural sector was not included as its inclusion was deemed beyond the scope of the study.  Two points are important about this survey study: (i) it is not representative of the ‘whole’ private sector in Gaza but, rather, has a manufacturing focus; and (ii) it is not a formal impact evaluation of the Israeli easing measures, since it does not account for other factors influencing industrial activity in the Gaza Strip (e.g. the fluctuating tunnel economy) following the Israeli easing measures in mid-June, 2010.  The results of the study, therefore, should be interpreted carefully.  Some judgments relating to reported changes in the manufacturing sector identified in the survey are set out below. They are based on follow-up consultations between the PalTrade survey team and selected companies.

First Round of Survey Results - The manufacturing sector in Gaza experienced a 27 percent improvement in sales in the second half of 2010 with the largest growth occurring in the food, handicrafts and chemical sectors. These changes are likely to have resulted from the expanded entry of industrial inputs from Israel. Average employment levels in manufacturing increased slightly following mid-June 2010. The recent uptick in average sales notwithstanding, January, 2011 sales figures represent only 58 percent of the level of sales in June, 2005. A large proportion of manufacturing companies in Gaza (57 percent) are ready to export within one month of receiving approval. The major business constraints continue to be the unreliable supply of electricity, the unpredictable availability of raw materials and extremely limited access to export markets.

To read a summary of the report's key results, click here