Conflicts and Firm Outcomes: Evidence from the West Bank and Gaza over the Last Decade (2016–25)

Jingyuan Deng and Gianluca Mele

No 11335, Policy Research Working Paper Series from The World Bank

Abstract: This paper provides novel firm-level evidence—based on an enterprise survey from June 2025—on the impact of conflict exposure on firm performance in a context of chronic instability. The results indicate that, even under persistent conflict conditions, exposure significantly reduces firm sales and the propensity to invest, with the magnitude of the sales effect aligning with prior literature. A key mechanism driving this outcome is conflict-induced power outages, which exhibit an elasticity close to unity and account for roughly one-third of the overall impact of conflict exposure on sales in the West Bank and Gaza. Additionally, smaller firms tend to de-prioritize concerns over taxation and corruption under conflict exposure, whereas larger firms and exporters maintain these concerns and place greater emphasis on access to finance and political instability, respectively.

Date: 2026-03-18
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