While it is true that a viable private sector will boost the economy, create jobs and reduce dependence on foreign aid, the more pressing question is whether Tel Aviv will allow this to happen.

Certainly there are signs of cautious optimism, though progress remains painfully slow. Middle East envoy Tony Blair is pressing for the creation of a Palestinian free zone in the north near Jenin, and for the removal of check-points to ease restrictions on movement.

But perhaps more significantly, in the West Bank at least, Palestinians are more optimistic about their business prospects and say they expect productivity to improve in the coming months. This optimism is characterised by the decision to hold the first Palestine Investment Conference in Bethlehem this month, at which funding will be sought for $1.7bn worth of projects.

The conference is the first step in an effort to cultivate a viable private sector in the West Bank, if not at the moment for Gaza, where the Israeli closure remains total. Seeking private investment rather than charitable donation is the right approach. Just hosting such an event with the backing of the local private sector should be considered a success, and one that will hopefully be repeated in 2009.

Index of all special report stories

• ONLINE-EXCLUSIVE DATA: Supporting the private sector

• Interview - Salam Fayyad: A unifying force

• ONLINE EXCLUSIVE: Hamas: Government is failing to reduce bureaucracy

• ONLINE EXCLUSIVE: Regulatory reform in Palestine

• Housing a growing population

• Education - The struggle to raise standards

• ONLINE EXCLUSIVE: Curriculum under review

• Comment: Palestine needs private sector