Economic possibilities for Gaza

It doesn't hurt to dream of better days.

Fortunately, reports that Israel bombed a hospital in Gaza and killed 500 people turned out not to be true. But it is true that Israel is dropping many bombs on the territory, and that many innocents have already been killed, and many more will be killed in the days to come. Few people seem to care much about the 2 million people of Gaza — not Hamas, who tries to provoke brutal reprisals to win international support for their cause, not Israel, which talks of collective punishment and has blockaded Gaza for decades, and not Egypt or other Arab countries, who have refused to take in Gazan refugees. The Gazans are isolated and alone, stateless and forsaken by basically the entire planet.

At a time like this, some people might see it as dismissive or callous to talk about the long-term economic future of Gaza. Perhaps it takes a terminal case of Economist Brain to look at a land in the grip of endless war and say “You know what this place needs? Some GDP!”. But I think it’s an important exercise, because economic development provides a nation with a purpose other than the catharsis of violence. And having that long-term vision fixed in place helps to make decisions about leadership in the present, too, because it allows people to ask “Which leaders will get us closer to that bright, prosperous future?”.

Nor is it unrealistic to think that in half a century’s time, Gaza might be an economically flourishing place. Large swathes of Hanoi were flattened by American bombs in the 1960s and 70s, but fifty years later it looks like this:

"Hanoi skyline at night" by Ntml4507, CC BY-SA 4.0

In fact, many of today’s rich countries had periods in their history over the last century where they were laid waste by war and hobbled by repressive governments. They escaped those bad times, and perhaps Gaza can too.

Of course, that sort of development requires national self-determination, an end to major external conflicts, and long-term political stability. I’m not sure anyone knows how to get those things for Gaza right now. But I think it’s important to have a picture in mind of what the benefits might look like.

So here’s a quick sketch of a vision for the economic future of Gaza. It starts with a quantitative goal: raising per capita GDP to $10,000 in PPP terms. I then speculate on a few industries that Gaza could target, using some other countries as comparisons. And I talk a bit about how migration could play a significant role. I don’t mean to present this vision as an exclusive one — there are plenty of alternative approaches and goals, and this is far from a detailed road map in any case. But I hope this post will be enough to jump-start some thinking about better days.

A concrete goal: Raise Gazan per capita GDP (PPP) to $10,000

A lot of people, especially on the left of the political spectrum, criticize GDP’s usefulness as a measure of human welfare. And sure, there are plenty of important things GDP leaves out (leisure, inequality, political freedom, life expectancy, education, and so on). But GDP is strongly correlated with broader measures of well-being like the Human Development Index, and with median levels of consumption. If you increase GDP, your country is highly likely to be healthier, longer-lived, better-fed, better-educated, happier, and so on.