Abstract
Between 1994 and 2003 macroeconomic trends in the occupied Palestinian territories pointed upwards, then fell steeply. This reflected the positive climate that followed the Sept. 1993 Oslo accords, then the precipitate decline after the outbreak of the second Intifada in 2000. The author outlines economic developments since the Oslo accords, and the limitations of a model marked by dependence on the Israeli economy and on supplying low-skilled workers. He considers a small open economy with diversified exports is more likely to provide the numerous and more productive jobs the rapidly growing Palestinian labour force needs.