ABSTRACT
Israel and the West Bank/Gaza Strip were parts of Mandatory Palestine before 1948. While Israel has achieved a relatively developed status, the residual area has, despite a significant increase in per capita consumption, remained economically underdeveloped. The military administration is in charge not only of ensuring security but also of "protecting" Israel's economic interests. Industry in the territories is largely traditional - small-scale workshops concentrated in food, textiles, repairs and handicrafts. There has also developed subcontracting based on the low wage scales in labor-intensive industries. Many of the new enterprises would be from the modern sector of industry. It is assumed that there is close economic cooperation with Jordan and that some economic links with Israel remain - but on a more equitable basis. The territories import 90 per cent of their industrial goods from or via Israel. The costs are higher than world prices because of Israel's high rate of taxes and tariffs.
