Industrial Zones and Arab Industrialization in Israel

Abstract

Since the 1970s there has been increased integration of the Arab sector into the Israeli economy. This integration has been characterized by the increase in industrial entrepreneurship in the Arab settlements. Critical to the industrialization process are factors related to the availability of industrial zones and the infrastructure which supports industrial production. The main factors are: limited reserves of land for industry; lack of a land market; the structure and pattern of land ownership; entrepreneurial culture which does not encourage neither using bank loans nor the commercialization of land; the absence of allocation of industrial zones in the settlements master plans; low level of infrastructure and absence of public support for the development of industrial infrastructure; and the fact that the legislation for the encouragement of capital investments has not been applied in Arab settlements. These factors may be divided between external factors partly affected by government discriminative policy which does not support Arab industrial development, and internal factors related to the specific features of the Arab economy. Together, these factors reduce the attractiveness of the Israeli Arab periphery for the arrival of core located major industrial plants, and have a negative impact on Arab internally initiated industrial entrepreneurship.