ABSTRACT
As policy makers look beyond the ongoing hostilities to consider a post-conflict period of Palestinian sovereignty, the future shape and functioning of the Palestinian economy will depend on the economic policy framework in place, particularly vis-à-vis its major trading partner, Israel. Predicting the shape of things to come is a risky undertaking, even more so given the large number of evolving variables that interact to generate wide-ranging outcomes. As a theoretical exercise we can examine the trade policy options available to Palestinian policy makers in the future, but the resulting trade performance and economic outcomes will depend more broadly on factors largely beyond the control of Palestinian decision makers. These include, notably:
1 the degree of restrictions on the movement of goods; 2 Israeli demand for Palestinian labour.
