Back to the Framework

Next, we plug the information from the secondary data into the framework, in addition to additional factors mentioned in the reports above into a summary table. See Table 13: Enablers and Constraints for the Case of Palestine. This leads to the next question in our analysis to find the potential areas of improvement:

Based on the current understanding of the state of the Palestine, what are the value chain processes among (Create, Make, Move, Integrate, and Use) that have the most potential to

generate a positive change towards an information economy by manipulating one or more of the super factors?

It is clear from our analysis of the Palestinian current state that there are many restrictions on the Palestinian economy for activities such as exporting and importing actual products due to the political reality, location, and the economic and political uncertainty and the restrictions on movement.

There is very little control over those realities, and it has been shown that there is much uncertainty even to attempt to adapt to this situation in order to do activities such as (Make, Move, Integrate).

On the other hand, there is potential in outsourcing, which can be thought of as part of the (Make) value chain process, however, the political uncertainty and the risks associated with it, did in the past affect the outsourcing arena, with international companies moving to less risky countries for outsourcing.

There seem to be many opportunities in relation to the “Create” value chain activity. Regarding economic impact, “Create” is expected to lead to more value by creating new products and services and selling them in different markets, as in the case of Pinchpoint Company discussed earlier in this Chapter.

In the next Chapter, those two value chain activities (Create and Make) are analyzed in more details from the point of view of the interviewees, to understand whether there is agreement on their potentials for the development of the ICT sector in Palestine.

Table 13: Enablers and Constraints for the Case of Palestine

SF* Sub Factors Enablers Constraints

EF

Location Access to middle eastern markets Proximity to Israeli ICT Market Proximity to Europe

Restricted access to ports

Political Reality Political uncertainty,

Geographical discontinuity, Limited movement

Economy Dependency on volatile foreign aid,

High unemployment

GM

Trust Good level of trust in Palestinian products Good level of customer satisfaction.

Lack of investment trust due to conflict Branding issue

Little understanding of non-returning customers Investment Palestinian ICT Capacity Building Initiative,

Some Israeli investment

Low level of private investors

Global Competition Established relations with many companies in different regions

Some companies have expertise recognized internationally

High Competition from countries in the region Lack of physical presence in markets

Lack of knowledge about international markets FDI Competitive advantage is driven by international agencies Low attractiveness to FDI.

SCF

Culture Shared culture with Arab World, Innovative culture

Risk averse culture Unique Factors English proficiency,

Openness to international markets Diaspora

Technical restrictions

InS

ICT Infrastructure ICT organizational body (PITA)

High computer &internet& mobile penetration

Limitation on building and using infrastructure TSI network lack of capacity and influence

Supporting Industries Lack of financial investment.

Weak financial sector.

Refusal to finance ICT projects

SF* Sub Factors Enablers Constraints

Human Capital Untapped ICT workforce Low input costs

Low labor costs innovation abilities

Gap between ICT Market and Education Low Productivity

Lack of business and managerial skills.

Inadequate training on Critical thinking, creativity and problem-solving

Brain drain

Low Marketing and sales skills Limited labor force mobility

GP

Technology Policy Commitment to ICT development strategy at Presidency Outdated and unenforced IP protection Lack of political alignment

Low commitment from ministries

Not operationalized Palestinian Telecommunications Regulatory Authority

No e-commerce regulation No standards for the ICT industry Investment Policy Tax breaks for the ICT sector

Considered Priority sector

Legal barriers, Bureaucracy, uncertain tax climate more tax breaks are needed Trade policies &

Agreements

No agreements for market access.

*SF: Super factors, GM: Global Markets, SCF: Sociocultural factors; InS: Infrastructure, GP: Government Policies.

There are a number of opportunities towards creating new products and services, particularly software productions, some of those opportunities that were found from the study of the Palestinian case are:

 A general direction by the government, the ICT sector, and international organizations to encourage entrepreneurship and creativity

 The existence of international support through the U.S government and companies such as Cisco, HP, and Microsoft to invest in the ICT sector.

 Palestinians are reported to be innovative when given the right motivation and support.

 An openness to the international market with good English proficiency in Palestine, in addition to access to the Middle Eastern market.

 An exposure and partial proximity to the successful Israeli ICT sector which opens the door for exchanging ideas and for partnerships.

On the other hand, there are a number of challenges facing the “Create” process as was shown in the case of some of the startups, such as:

 General risk averseness attitude in the Palestinian culture and a preference towards regular jobs rather than startups.

 In times there was a lack of investment money for the creative ideas.

 The existence of an information gap between the ICT market and academic institutions.

 Movement and travel restrictions imposed by the political reality which restricts the movement of people and goods in and out of the Palestinian market.

 Some legal and policy latency such as the outdated and little enforcement of copyright protection.

Regarding control, the Palestinians have more control over most of the factors that pose challenges to the “Create” process than for the other processes. Those changes can be in the form of policy changes in different areas, such as the legal, taxation, education policy, in addition to possible attempts to affect the cultural aspects of innovation such as encouraging the innovation culture, and risk management skills associated with it.

Now that one of the value chain processes was identified as having a potential impact the Palestinian economy and contribute towards building an information economy, we need to form a better understanding of the changes that need to be made to encourage an innovation and creation culture, and to try understand the success factors identified in the literature to make that happen. This is the purpose of the next section.