<p>The aid itself would not make Gaza the richest Mediterranean nation. To be clear, Gaza could be the richest Mediterranean nation in principle, if pro-growth economic policies were pursued over last half of a century or so, but this is impossible to achieve through economic aid.</p>
<ol>
<li><p>The literature that looks at case studies of economic development aid shows mixed results, in some cases showing that development aid can actually hurt economic growth (e.g. see <a href="https://doi.org/10.30958/ajbe.2.4.6" rel="nofollow noreferrer">Moolio &amp; Kong, 2016</a>; <a href="https://doi.org/10.1080/09638199.2017.1349167" rel="nofollow noreferrer">Sothan, 2018</a>; <a href="https://doi.org/10.1080/09638199.2017.1349167" rel="nofollow noreferrer">Tang &amp; Bundhoo, 2017</a>).</p>
</li>
<li><p>Cross country studies show that the effect of development aid on economic growth is ([Abate 2021; <a href="https://scholar.google.nl/scholar?q=effect%20of%20aid%20on%20economic%20growth&amp;hl=en&amp;as_sdt=0&amp;as_vis=1&amp;oi=scholart#d=gs_cit&amp;t=1703690270132&amp;u=%2Fscholar%3Fq%3Dinfo%3AgdJuUlzIinUJ%3Ascholar.google.com%2F%26output%3Dcite%26scirp%3D0%26hl%3Den" rel="nofollow noreferrer">Ekanayake et al 2010</a>)]<a href="https://www.tandfonline.com/doi/full/10.1080/23322039.2022.2062092#:%7E:text=Large%20number%20of%20studies%20found,countries%20than%20middle%2Dincome%20countries." rel="nofollow noreferrer">4</a>:</p>
</li>
</ol>
<ul>
<li>Dependent on institutional quality (e.g. how well are property rights protected, contracts enforced, etc).</li>
<li>Non-linear, extremely poor countries benefit more than less poor countries. This implies that country can't really become rich just thanks to development aid alone.</li>
</ul>
<p>Hence, if you want to interpret the quote literally then its clearly not rooted in sound economics. Aid can at best help with economic growth when the country is very poor but as a country approaches middle and high income levels the benefits to economic growth would become very small. Moreover, these benefits are contingent on having good institutions.</p>
<p>However, if you want to interpret the quote more loosely as, Gaza having potential to become the richest Mediterranean country, if sound policies, like not diverting development aid,  were pursued, then there is truth to it. It is generally consensus in economics that country does not need any natural resources or have large size to grow. Countries like Singapore are prime examples of that.</p>

CC BY-SA 4.0
2023-12-27T18:52:28.290Z
The answer ignores other restrictions. To quote from the World Bank overview: "Movement and access restrictions imposed by Israel continue to limit Palestinian development in the West Bank while creating conditions akin to a nearly closed economy on Gaza."
Michael Greinecker
CC BY-SA 4.0
2023-12-27T19:43:33.800Z
@MichaelGreinecker but i believe those restrictions are there due to the bellicose policies pursued by Hamas, hence if they would pursue more sound peaceful policy there would not face the blockade
1muflon1
CC BY-SA 4.0
2023-12-27T20:57:42.080Z
That surely plays a role, but the example of the West Bank shoes that it is not the only factor.
Michael Greinecker
CC BY-SA 4.0
2023-12-28T03:55:05.237Z
Even the bellicosity of the Gazan government is endogenous, as Hamas got support from anti peace Israeli factions and was able to rise to power as a result.
Giskard
CC BY-SA 4.0
2023-12-27T15:26:50.737Z
2023-12-27T15:26:50.737Z
1muflon1
<p>According to <a href="https://matzav.com/kennedy-backs-israel-heated-debate-erupts-as-rfk-stands-up/" rel="nofollow noreferrer">this transcript</a>, (I don't have access to the original interview), Robert Kennedy told Krystal Ball:</p>
<blockquote>
<p>The international aid agencies have given Hamas, have given Gaza more than 10 times per capita what we gave to rebuild all of Europe after the Marshall Plan. 8,300 dollars per capita, every person in Gaza. We rebuilt Europe with  $621 per capita in Europe, and we rebuilt it. What did they do with that money? Instead of using it to make this, you know, Gaza this beautiful country with white sand beaches. It should be a paradise...They take virtually all the money and they steal it...It’s not Israel’s fault that Gaza is poverty-stricken. Gaza should be one of the wealthiest states on the Mediterranean.</p>
</blockquote>
<p>If Gaza truly received US$8,300 per capita in international aid over time, would that indeed have made it - barring diversion of funds for non-rebuilding purposes - one of the wealthiest states on the Mediterranean? (I realize Gaza does not have independent statehood, and I'm assuming Kennedy's intent was that if it were a state it would be from the wealthiest.)</p>

CC BY-SA 4.0
2023-12-27T14:47:11.937Z
What topic are you actually interested in? Effect of development aid on economic growth? Or if country can grow without natural resources? There might already be answers that cover these issues.

Cases such as Hong Kong or Singapore show that country does not need any resource to be rich or even aid per se, hence trivially any place around Mediterranean could be the richest place around the Mediterranean, if sound pro growth policies are pursued Gaza included. Whether the right policies would or would not be pursued in contrafactual where the aid is not diverted seems just opinion based
1muflon1
CC BY-SA 4.0
2023-12-27T14:55:59.970Z
Unless you want to assume everything would stay the same except for the diversion of the aid
1muflon1
CC BY-SA 4.0
2023-12-27T15:07:05.553Z
@1muflon1, Effect of development aid on economic growth is it.
YouDontSay
<money-supply><international-economics><income-effect>
Could Gaza have been "one of the wealthiest states on the Mediterranean"?
YouDontSay
# Could Gaza have been "one of the wealthiest states on the Mediterranean"?

(Asked by: username_0 on 2023-12-27)

According to [this transcript](https://matzav.com/kennedy-backs-israel-heated-debate-erupts-as-rfk-stands-up/), (I don't have access to the original interview), Robert Kennedy told Krystal Ball:

> The international aid agencies have given Hamas, have given Gaza more than 10 times per capita what we gave to rebuild all of Europe after the Marshall Plan. 8,300 dollars per capita, every person in Gaza. We rebuilt Europe with $621 per capita in Europe, and we rebuilt it. What did they do with that money? Instead of using it to make this, you know, Gaza this beautiful country with white sand beaches. It should be a paradise...They take virtually all the money and they steal it...It’s not Israel’s fault that Gaza is poverty-stricken. Gaza should be one of the wealthiest states on the Mediterranean.

If Gaza truly received US$8,300 per capita in international aid over time, would that indeed have made it - barring diversion of funds for non-rebuilding purposes - one of the wealthiest states on the Mediterranean? (I realize Gaza does not have independent statehood, and I'm assuming Kennedy's intent was that if it were a state it would be from the wealthiest.)

**Tags:** money-supply, international-economics, income-effect

> **Comments:**
> **username_1**: What topic are you actually interested in? Effect of development aid on economic growth? Or if country can grow without natural resources? There might already be answers that cover these issues.  Cases such as Hong Kong or Singapore show that country does not need any resource to be rich or even aid per se, hence trivially any place around Mediterranean could be the richest place around the Mediterranean, if sound pro growth policies are pursued Gaza included. Whether the right policies would or would not be pursued in contrafactual where the aid is not diverted seems just opinion based  
> **username_1**: Unless you want to assume everything would stay the same except for the diversion of the aid  
> **username_0**: @username_1, Effect of development aid on economic growth is it.  

---

## 1 answers

### Answer by username_1 on 2023-12-27. Score: 3 | Accepted answer

The aid itself would not make Gaza the richest Mediterranean nation. To be clear, Gaza could be the richest Mediterranean nation in principle, if pro-growth economic policies were pursued over last half of a century or so, but this is impossible to achieve through economic aid.

1. The literature that looks at case studies of economic development aid shows mixed results, in some cases showing that development aid can actually hurt economic growth (e.g. see [Moolio & Kong, 2016](https://doi.org/10.30958/ajbe.2.4.6); [Sothan, 2018](https://doi.org/10.1080/09638199.2017.1349167); [Tang & Bundhoo, 2017](https://doi.org/10.1080/09638199.2017.1349167)).
2. Cross country studies show that the effect of development aid on economic growth is ([Abate 2021; [Ekanayake et al 2010](https://scholar.google.nl/scholar?q=effect%20of%20aid%20on%20economic%20growth&hl=en&as_sdt=0&as_vis=1&oi=scholart#d=gs_cit&t=1703690270132&u=%2Fscholar%3Fq%3Dinfo%3AgdJuUlzIinUJ%3Ascholar.google.com%2F%26output%3Dcite%26scirp%3D0%26hl%3Den))][4](https://www.tandfonline.com/doi/full/10.1080/23322039.2022.2062092#:%7E:text=Large%20number%20of%20studies%20found,countries%20than%20middle%2Dincome%20countries.):

* Dependent on institutional quality (e.g. how well are property rights protected, contracts enforced, etc).
* Non-linear, extremely poor countries benefit more than less poor countries. This implies that country can't really become rich just thanks to development aid alone.

Hence, if you want to interpret the quote literally then its clearly not rooted in sound economics. Aid can at best help with economic growth when the country is very poor but as a country approaches middle and high income levels the benefits to economic growth would become very small. Moreover, these benefits are contingent on having good institutions.

However, if you want to interpret the quote more loosely as, Gaza having potential to become the richest Mediterranean country, if sound policies, like not diverting development aid, were pursued, then there is truth to it. It is generally consensus in economics that country does not need any natural resources or have large size to grow. Countries like Singapore are prime examples of that.

> **Comments:**
> **username_2**: The answer ignores other restrictions. To quote from the World Bank overview: "Movement and access restrictions imposed by Israel continue to limit Palestinian development in the West Bank while creating conditions akin to a nearly closed economy on Gaza."  
> **username_1**: @username_2 but i believe those restrictions are there due to the bellicose policies pursued by Hamas, hence if they would pursue more sound peaceful policy there would not face the blockade  
> **username_2**: That surely plays a role, but the example of the West Bank shoes that it is not the only factor.  
> **username_3**: Even the bellicosity of the Gazan government is endogenous, as Hamas got support from anti peace Israeli factions and was able to rise to power as a result.  

---

