If Israel were to enter into a peace accord with the Palestinians, the economy in Israel would expand by a combined $123 billion over the following decade, according to a new study released on Monday.
The new study examined the economic and budgetary costs of five different scenarios from 2014 through 2024 – a two state solution, a unilateral withdrawal that was coordinated, a unilateral withdrawal that was uncoordinated, nonviolent Palestinian resistance and an uprising with violence. Those were compared with a baseline scenario.
One of the authors of the study said the researchers believe the study illustrates the unrealized benefits and significant costs that the parties have not succeeded in conceptualizing themselves.
The study includes estimates of the direct costs such as spending in the budget and those that are associated with violence as well as the opportunity costs like investment and the new market opportunities.
Each scenario had certain implications on issues that were wide ranging as banking regulation and the cost of business uncertainty and instability.
The study estimated that the government of Israel spent over 2% of its complete budget on different settlements around the West Bank and Jerusalem.
The scenario of two states envisioned the withdrawing of 100,000 settlers in the West Bank, an increase of 15% in labor productivity and investment, an increase in tourism of 20%, and the tripling of trade in the Middle East.
At the same time, Palestinians would see an increase of $50 billion in the economy over a period of 10 years, which would be an increase in the economy of 36% per person, compared to an increase per capita in Israel of 5%.
However, if Israel and the Palestinians have serious violence, the per capita GDP would drop by 10% in Israel and by 47% for the Palestinians, adding up to losses over 10 years of $250 billion for Israel and $46 billion for the Palestinians.
Both scenarios that included withdrawals had minor effects on the economies of both countries.