THE ECONOMIC INTERVENTION STRATEGY OF THE INTERNATIONAL NON-GOVERNMENTAL ORGANIZATIONS IN PALESTINE. A CASE STUDY: THE SHORT-TERM EMPLOYMENT PROJECTS

Many countries around the world, both developed and developing, are characterized by high level of unemployment. This phenomenon has profound implications not only for economic activity, by limiting the amount of labour supply and therefore potential output, but also for political and social unrest, as the experience of many Middle-Eastern and North-African economies has recently shown. Unemployment is particularly relevant for Palestine. Indeed, since the mid-1990s, Palestine is one of the countries in the world with the highest rate of unemployment. Persistently high unemployment reflect several characteristics of the Palestinian economy, mostly important the dependence on the Israeli's economy and high political instability. This research focuses on unemployment issues in Palestine and it investigate the role of macroeconomic factors (growth and international aid) as well as those INGOs short-term employment projects in affective unemployment. In particular, the main goals of our study are:  To key trends in the unemployment rate in Palestine, providing also a breakdown by age, gender and regional groups.  To investigate the relationship between the unemployment rate and macroeconomic factors, including real GDP growth and the international aid flows.  To investigate the effects of the interventions of the INGOs—which have a significant role in the socio-economic developmental process in Palestine—in prompting employability and creating job opportunities. The key results of this analysis are the following:  The unemployment rate has steadily increased since the mid-1990s, from about 18 percent in 1995 to about 27 percent in 2016. Unemployment is particularly high among the youth and women.  Most of the variation in unemployment is explained by changes in economic activity. In particular, an increase in GDP growth is found to reduce the unemployment rate by about ½ percentage point.  Internal aid flows tend to be countercyclical—that is, being higher during periods of weak economic activity and high levels of unemployment.  Short-term employment programs, financed by INGOs, have a significant effect on the employability of the Palestinian’s labour force. While this (latest) result has important policy implications, it is also opportune to mention the main limitations of this analysis: (i) there is no database that can be used to find out the figures for the short-term employment projects beneficiaries numbers; therefore, it is difficult to identify the suitable sample size for the study; (ii) the INGOs did not share their project's data; (iii) collecting data through the questionnaires, was not easy and is likely to be subject to selection bias since most of the people approach felt that this research was not useful. Notwithstanding these limitations, our study is, to the best of our knowledge, the first that reports original results of the effects of INGOs short-term employment projects on a sample of Palestinian graduated people. The rest of the work is structured as follows. The first chapter presents an overview on the unemployment problem in Palestine, also differentiating unemployment trends by regions, age and gender groups. The chapter concludes by examining the cyclical relation between unemployment and output—the so called Okun’s Law. The second chapter discusses the role of international aid in Palestine, and its implications for labour market. It also conducts an analysis on the cyclicality of these flows and how they relate to changes in unemployment. The third chapter contains a micro analysis—based on data collected through a questionnaire—on the effect of NGOs’ short term employment projects on the employability of Palestinian graduates. In addition, it provides a qualitatively analysis of the opinions of those that participated to these short-term employment projects. The last section concludes with policy implications.