The roles played by the Mandatory government and by the organized Jewish community's public institutions in shaping the economy and its dualistic nature were discussed in chapter 1 in general terms, and referred to in passing throughout this volume. The present chapter seeks to supplement the above discussions, primarily by putting the economic functions of Palestine's government and (Jewish) non-government public sectors in a quantitative perspective.

The government

The scholarly literature on the British rule in Palestine, to which a number of significant additional contributions have been made in the past two decades, deals at length with the complex and conflicting factors underlying the modus operandi of the Mandatory government both as ruler and as public sector. Although they do not necessarily reach a common assessment and interpretation, the scholars working in the field seem to agree on the basic considerations that guided Britain in molding its rule and in formulating its economic institutions and policies in Palestine as a colonial power and as the League of Nations' Mandatory. These considerations are commonly identified as being derived from imperial interests in a colonial and geopolitical context, coupled with liberal (laissez-faire) attitudes in the economic sphere, on the one hand, and guided by various Palestine-specific concerns, on the other (Gross, 1984b; and chapter 1).

Britain's interests as a colonial empire led it to establish in Palestine a smoothly functioning colonial-style government based on a modern administrative, legal, and fiscal system, as well as on indigenous structures and customs. The same interests also called for government initiative and finances in developing the country's physical transport and communication infrastructure, while in other respects minimizing government intervention in economic affairs, and conducting an “open door,” largely non-discriminating, external trade policy (see chapter 5).