The Economic Impacts of Israeli Industrial Zones in the West Bank Palestinian Employment, Environmental Pollution, and Constraints on Palestinian Logistics - Policy Brief (2)
On 20 May 2026, the Palestine Economic Policy Research Institute (MAS) convened its second roundtable session of the year to examine the economic implications of Israeli industrial zones in the West Bank. The session brought together a diverse group of researchers, experts, and representatives from Palestinian economic and industrial sectors, who participated both in person at the Institute’s premises and virtually via Zoom. The discussion took place against the backdrop of the rapid expansion of settlement industrial zones and their growing influence on the structure of the Palestinian economy. These developments manifest through the attraction of Palestinian labor and investments, as well as their broader effects on the environment, local development trajectories, and commercial activity.
The session aimed to foster an in-depth discussion on the economic and political dimensions of these zones, assess their implications for Palestinian development prospects, and examine the required policies and alternatives to strengthen the Palestinian national economy and reduce economic and structural dependency on the Israeli economy.
Official Israeli data indicate the existence of approximately 35 Israeli industrial zones in the West Bank, comprising heavy, medium, technological, and commercial industries. These areas include metals, chemicals, plastics, and cement factories, in addition to technology parks and commercial service complexes linked to bypass road networks and main routes connecting settlements to Israel.
These areas operate under an official Israeli policy that grants them extensive privileges, including tax exemptions, concessional loans, direct government support, and streamlined regulatory processes. The Israeli government also designates most of these zones as “national priority areas,” which provides companies based there significant economic advantages compared to those operating inside Israel itself.
The paper shows that these areas are not merely economic spaces, but they function as instruments for reshaping the Palestinian geographic and economic landscape by integrating settlements into the Israeli economic structure, and redirecting Palestinian trade and labor flows toward the Israeli economy.