Discusión del objetivo particular 3

The preceding sections are primarily aimed at assessing the export potential for the Palestinian business and professional services sector, and developing the business case for an export strategy for this this services sector. The analysis reveals that the sector indeed possesses strong comparative advantages that can be translated into competitive advantages. The following is an enumeration of the main comparative advantages for this sector.

The Palestinian business and professional services has certain comparative advantages that could be converted into competitive advantages if supported in a sustainable manner. These include the following aspects:

- An entrepreneurial culture coupled with a good higher education system that fosters a steady pipeline of high caliber professionals: The majority of enterprises in the sector are MSMEs with average employee strength of 3 employees. The entrepreneurship culture is firmly embedded in Palestine. Additionally, the high literacy rate and a relatively strong national educational system have resulted in a steady pipeline of fresh graduates entering the employment stream every year.

- High level of development project activity provide exposure and employment opportunities for consultants: Due to the heavy presence of international development partners in Palestine, consultants – especially generalist consultants – are exposed to a variety of projects in the country. This is relevant because in general, the small size and the underdeveloped nature of the domestic economy, as well as challenges in penetrating market segments outside of Palestine offer significant challenges to operators in the business and professional services sector. Experiences in working with development projects allow a conduit for professionals to hone their capabilities, which might otherwise not be available.

- Language proficiency (English-Arabic) levels have partially resulted increasing trends of professional consultants being engaged in Arabic speaking countries: In the recent past, there have been increased mode 4 activities in Arabic speaking markets including Yemen, Afghanistan, Iraq among others. The language proficiency is an important comparative advantage that will gain increased relevance when reconstruction efforts (development activity) ramps up in Libya, Syria and other conflict/post-conflict states.

The language proficiency also offers a strong value proposition relative to the customer care and translation services sectors.

- NES implementation activity is expected to result in high demand for business services: As discussed earlier, development projects offer an important revenue pipeline for operators in the business and professional services sector given the small size of the domestic market and the challenges that operators face regularly in penetrating outside markets. In this context, the expected implementation activity stemming from the just completed National Export Strategy (NES) initiative is expected to offer significant opportunities to sector operators. NES implementation will result in a wide variety of projects being launched across ten sectors and three cross-sectors, offering opportunities for sector operators to render their services across many cross-cutting areas.

- Prevailing client perception that Palestinian consultants are in a better position to understand the socio-political environment prevailing in the client country: The sector consultations revealed a belief among sector stakeholders that current and potential clients outside Palestine, especially in post-conflict and conflict affected countries such as Afghanistan are relatively open to the involvement of Palestinian consultants on projects as they identify closely with the Palestinian context – and have faith in the ability of Palestinian consultants to understand better the operating environment in the client country. While it is difficult to validate whether this is indeed the case, this is at least a theoretical possibility that could serve as a selling point for the sector, especially of course when combined with professional and language based competencies.

- Dual citizenship can assist business services owners in reaching international markets: In addition to retaining a Palestinian passport/ID, Palestinian businessmen often have dual citizenships with countries such as the US, Jordan etc which can offer advantages in terms of

developing new export relationships, if leveraged. The relative ease of movement access across borders as well as the ability to register and open new business entities in the target markets are indeed two important comparative advantages.

Despite the above comparative advantages, there are significant challenges existing at the policy, enterprise, institutional levels, as well on the market side related to the sector. The strategy focuses on alleviating these constraints based on established best practices and specifically focuses on the identified root causes of the constraints. In addition to focusing on constraints, the strategy also seeks to leverage opportunities in the form of emerging trends in the sector in international markets.

The future state of the sector has been developed using a combination of consultations, surveys and analyses. This future state consists of two components:

 A target market-related component involving identification of key markets in the short and medium to long terms for exporters, and,

 Structural changes to the value chain that result in either strengthening of linkages or introduction of new processes;

Target markets and structural adjustments to the value chain are identified in the figures below. As in the case of the current value chain, both the overall value chain as well as the customer care center component are highlighted separately.