By Noah Browning
RAMALLAH, West Bank, March 12 (Reuters) - Israel's system of checkpoints and restrictions in the occupied West Bank inflicts long-term damage on Palestinians' ability to compete in the global market, the World Bank said on Tuesday.
The policies are causing a contraction in manufacturing and agricultural sectors, "alarmingly" high unemployment and social problems that would outlive any Israeli-Palestinian peace agreement, the organization said in its report.
Since the Oslo peace accords with Israel, Palestinians have exercised limited autonomy in the West Bank, but a final peace has not been reached.
Following a deadly uprising in 2000 defined by Palestinian suicide bombings and Israeli incursions, Israel implemented stricter curbs on the movement of Palestinian people and goods.
Almost a quarter of Palestinians in Gaza and the West Bank are unemployed, contributing to shrinking productive sectors.
"The share of exports in the Palestinian economy has...been in steady decline since 1994, dropping to 7 percent in 2011, one of the lowest rates in the world," said the World Bank.
"The longer the current, restrictive situation persists, the more costly and time-consuming it will be to restore the productive capacity of the Palestinian economy," it said.
Palestinian hopes to build economic institutions capable of sustaining a hoped-for state have withered as the curbs persist.
Real GDP growth has slumped from a high of 11 percent in 2010 and 2011 to 6.1 percent in the first three quarters of 2012, according to the Palestinian Central Bureau of Statistics.
Violent protests against government austerity measures rocked West bank cities last September, and strikes have repeatedly jarred the public sector.
The Palestinian economy is bound closely to Israel's through infrastructure and trade and has few foreign trading partners.
In 2011, Israel received 86 percent of Palestinian exports and provided 73 percent of its imports, a situation the World Bank called "atypical."
Combined with the low rate of 17 percent employment for women, the World Bank said the atrophy of job skills will likely haunt Palestinians into the future.
"A skilled labour force is one of the key factors that any potential foreign investor would consider in deciding whether to invest in the Palestinian Territories even after a political solution has been realized," it said.
(Reporting By Noah Browning; Editing by Michael Roddy)