ABSTRACT
This chapter provides a balanced view of the possible implications of the peace process in general, and the establishment of Palestinian autonomy in the West Bank and Gaza in particular, for the Israeli economy, both in the short run and over the long term. It reports the possible indirect effects changes in the Israeli economy which are the result of the peace process, but are not linked to economic ties between Israel and Palestinian autonomy. The chapter explains economic factors and political constraints of Palestinian-Israeli interaction. The economic ties between Israel and the new autonomy in the West Bank and Gaza are likely to affect the four key sectors of the Israeli economy: trade, infrastructure, industry and agriculture. The indirect effects of the Gaza and Jericho First agreement on the Israeli economy include those changes that are the result of the peace process, but not linked to economic ties between Israel and the West Bank and Gaza.
