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On the Potential for Improved Conflict Resolution ON THE POTENTIAL FOR IMPROVED CONFLICT RESOLUTION THROUGH ENTREPRENEURSHIP IN PALESTINE An Undergraduate Research Scholars Thesis by HUNTER HAMPTON Submitted to Honors and Undergraduate Research Texas A&M University in partial fulfillment of the requirements for the designation as an UNDERGRADUATE RESEARCH SCHOLAR Approved by Research Advisor: Dr. Ashley Passmore May 2015 Major: International Studies Economics TABLE OF CONTENTS Page ABSTRACT .................................................................................................................................. 1 ACKNOWLEDGMENTS ............................................................................................................ 2 NOMENCLATURE ..................................................................................................................... 3 CHAPTER I. INTRODUCTION ................................................................................................ 5 II. METHODS ......................................................................................................... 12 III. RESULTS ........................................................................................................... 16 IV. CONCLUSIONS ................................................................................................ 31 a. Israel .............................................................................................................. 31 b. Palestine ........................................................................................................ 36 c. Palestine and Israel ....................................................................................... 40 REFERENCES ........................................................................................................................... 44 APPENDIX ................................................................................................................................. 48 ABSTRACT On the Potential for Improved Conflict Resolution through Entrepreneurship in Palestine. (May 2015) Hunter Hampton Department of International Studies Texas A&M University Research Advisor: Dr. Ashley Passmore Department of International Studies The purpose of this research project is to gain insight into the role of the Israel-Palestine conflict in the entrepreneurial environment of Palestine. It takes into account both aspects of the conflict itself and reactions to the conflict in order to suggest policy changes to improve the prospects of entrepreneurs and for conflict resolution in Palestine. The paper analyzes a variety of different economic, political, and social data to develop a cohesive picture of the entrepreneurial environment, and to see whether there are statistical correlations between certain subsets of that data that could indicate areas where policy changes would be most effective. The results of the study suggest policy changes or new policy programs to aid in the peace- building process in Palestine, based on social contact theory, the recommendations of other scholars working in similar regions, as well as the economic and security data analyzed here. 1 ACKNOWLEDGEMENTS I would like to thank and acknowledge Dr. Ashley Passmore, my research advisor, for her sound advice and guidance throughout this project. As a newcomer to Middle Eastern studies and to Israel-Palestine specifically, I benefited immensely from her experience in the field. Without her assistance and knowledge, which she so kindly made available to me throughout the research and writing of this paper, it is difficult to imagine that this paper would have been written at all. Obwohl dies der erste Aufsatz ist, den ich für Sie auf Englisch geschrieben habe, glaube ich, dass er ziemlich gut ist. Sowieso hoffe ich, dass Sie keine deutsche Version wollen... 2 NOMENCLATURE The “Palestinian Territories” shall refer to the land allotted to the Palestinian Authority as a result of the Oslo Accords, that which is delineated by the “Green Line.” However, the author is aware that by no means is all of this territory effectively under the governance of the current State of Palestine. For example, the parts of East Jerusalem annexed or under the control of Israel are not included in World Bank or Palestinian Central Bureau of Statistics data, and it is not clear if it is included in World Governance Indicators data. For the sake of simplicity in writing however, this term should suffice. Likewise, “Palestinians” shall refer generally to those living in the aforementioned Palestinian Territories and excluding Israeli citizens termed “settlers,” without regard to ethnicity, religion, or creed. Please note that it does not include Israeli-Arabs, who are often of Palestinian descent. To include all Palestinians living in the Palestinian Territories, Israel, or elsewhere is beyond the scope of this study. Additionally, throughout this paper the Palestinian Territories may be referred to using various designations (entity, region, etc.). Due to the nebulous status of the Palestinian Territories under international law, I have chosen to use vague terms wherever possible to avoid the appearance of “taking sides” in the issue. Under no circumstances should this choice be interpreted as a denial of Palestinians’ right to a state (whatever form that may take), and it should likewise be noted that I do not seek by whatever appellations I may use to assert any particular political goals or agendas. The goal of this paper is merely to provide an empirical analysis of possible policies that could bring about a positive change in the relationship, as it stands, between Israel and the 3 people of the Palestinian Territories. Conclusions made here are for the purpose of scientific inquiry alone, and should not be interpreted to reflect any biases or personal beliefs of the author. 4 CHAPTER I INTRODUCTION In recent years, much attention has been given to the phenomenon of the “Start-up Nation,” that is, the perceived explosion in growth of successful Israeli tech start-ups (Senor and Singer 2009). Books have been written on the topic, seminars held, and lectures given, and yet there has been relatively little interest in the entrepreneurial activities of the Palestinian Territories. For a variety of reasons, the economy of Palestine has never experienced the same degree of high output growth that Israel has. Although the purpose of this paper is not to specifically to identify a host of macroeconomic causes for Palestine’s relative lack of growth, the powerful dichotomy that exists between the two entities begs the question: what is the state of Palestinian entrepreneurship? Since the macroeconomic picture consists of many smaller microeconomic variables, a better understanding of the nature of Palestinian entrepreneurship could lead to greater insight into the region’s wider problems. Additionally, the impetus to explore this field gains further urgency from recent research on the confluence of conflict and entrepreneurship, which has sought to examine both the effects of conflict on entrepreneurial activities and the potential of entrepreneurship to contribute positively to conflict resolution between hostile groups. But the ability to develop policies and programs to address problems of entrepreneurship in the Palestinian milieu is hampered by scant research in the field that also incorporates the ever-present aspect of conflict. This is the problem that I will seek to address in this paper. The dearth of knowledge regarding Palestine’s entrepreneurial environment is understandable given the ever-changing state of affairs in that region of the world. When some form of conflict 5 breaks out in nearly annual intervals, data is often invalidated or made irrelevant far more quickly than in less volatile locales. However, this lacuna in the academic sphere belies the fact that research in this area could be greatly beneficial to policymakers in Israel, the Palestinian Territories, and other countries concerned with the region. Policies addressing the unique role of the entrepreneur and conflict are currently few and far between, even though some pioneering work in the field has been performed in other countries, especially Rwanda. And although the role of the entrepreneur in the global economic system is not the only factor in economic growth, it is certainly a vital cog in the machine, one from which the Palestinian Territories seem to have been unable to benefit. With that in mind, it would seem that research into the causes of this market failure could be of great value to the region as a whole. The objective of this paper is centered around the ineffectiveness of the Palestinian entrepreneur. According to the Global Entrepreneurship Monitor, Palestinians have “the lowest rate of nascent entrepreneurial activity of the seven GEM-MENA countries and much lower than the average for factor driven economies” (International Development Research Centre 2010). Much is made, of course, of the unstable political situation, but also of the many unique burdens which Palestinians must overcome in order to create a successful business. These challenges lie at the confluence of this paper’s research goals, which are 1) to address the state of the Palestinian economy and its entrepreneurial component 2) to assess the role that Israeli policy plays in entrepreneurial success and failure in the Palestinian Territories 6 3) to consider the potential that entrepreneurial activity holds for reducing conflict between hostile parties in Israel and the
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