Housing as an Internal Leading Sector In The Palestinian Economy

Abstract

This paper aims to investigate the role of housing as an internal leading sector in the Palestinian economy. In order to indicate to what extend investment in the housing sector may generate employment. In addition this paper aims to point out how growth in housing construction affects the related industries. The study examined the latest official statistics as well as used a special instrument to analyze the input ratios of a sample of completed public and private housing projects. The study is based on the assumption that the Palestinian housing sector will accomplish a growth rate of 5% annually in the medium term. The Palestinian housing sector includes 336,100 units. Of this total about 56% of the housing units are single houses built from concrete, while 25% are single houses built from stone. The multi-building units built from cement form 13% of the total housing units, while stone multi-building units form 6% of the total Palestinian housing units.

The study indicated that the average weighted ratios for housing construction inputs include 24.51% for Labour cost, 51% for the materials, and 24.6% for other cost items. The materials input include items produced by 14 related industries. The major industries that benefit are cement, stone mining, tiles and marble, cement blocks, and reinforcement steel. Ten of the related industries which supply the needed materials for constructions are local. Their shares in supplying materials for the Palestinian housing construction range from 100% such as the case of stones, blocks, and aggregates to about 10% such as in case of electrical materials.

The study also revealed that by investing one billion dollars in the Palestinian housing industry will lead to a direct effect on ten local industries by absorbing $ 248 million worth of their products. It also will generate labour valued at $ 247 million, which will produce 49,600 jobs. Other 6,150 jobs will be generated in the related industries. Finally, the study pointed out the major obstacles facing the development of the Palestinian housing constructions and suggested possible ways and means to cope with such problems.

Keywords: Hosing, construction, Palestine

JEL Classification: R21, R31, B43, N65, N75