ABSTRACT
Manufacturing and mining activity has been of minor importance in the West Bank and Gaza Strip both before and after the 1967 war. Industrial activity has stagnated at around 6 percent of the gross domestic product in the West Bank, and has increased to almost 11 percent in the Gaza Strip in the post-war period. Many Israeli firms have been attracted by the availability of cheap unskilled and semi-skilled labor in the territories to enter into subcontracts with some of the areas' entrepreneurs. In some cases, Israeli enterprises have been providing raw materials to workshops in the West Bank and Gaza Strip, which are then shipped back to Israel in a processed form for completion. Local businessmen have been reluctant to deal with Israeli banks because of the exorbitant interest rates charged on loans. In addition, all loans must be approved by the military authorities, and this often is extremely time consuming.
