(the latter denoting a hypothetical West Bank), where in both cases market access is computed using the same choice of _θ_ . The results of this back-of-the-envelope exercise are presented in Section 6.3.

# _Accounting for access to international markets_

Economic performance depends both on domestic and foreign market access. To account for potential impacts of changes in road connectivity on external market access we compute an augmented measure of market access in which we proxy external market access by adding Tel Aviv as a 12th destination (in addition to the 11 governorate capitals), considering a range of different population sizes for the external market.<sup>17</sup> We compute the shortest travel time to Tel Aviv allowing travel via three different border crossings, notably Al Jalama, At Tayba, and Tarqumiya.<sup>18</sup>

# _Top-coded versus bottom-coded NTL (_ + _dif-in-dif estimation)_

We use two different variations of original NTL data: top-coded and bottom-coded lights data (see Section 4.1). The latter will also be referred to as radiance-calibrated lights data, or RADCAL in short. These two variatons are obtained by employing different settings on the same satellite, akin to adopting different settings concerning light-sensitivity on a photo camera. When the top-coded setting is adopted, the satellite is sensitive to dim sources of light, thus providing accurate readings of the brightness of these relatively dim sources. However, it is unable to distinguish between lights if their brightness exceeds a certain level of intensity. The opposite holds true for bottomcoded (RADCAL) data; it accurately measures bright light but is unable to distinguish between relatively dim sources. This means that the bottom-coded series is better equiped to track lights for large and more developed cities, while the top-coded series may be preffered when tracking smaller less developed locations.

Top-coded data are recorded annually while bottom-coded data are only available

> 17In the default measure we assign a population of 10 million to Tel Aviv as it serves to represent all external markets. This number is admittedly arbitrary but serves as a crude approximation to the relative size of the Palestinian external market. Israel, which had approximately 8 million inhabitants in 2012, is the main trading partner of the West Bank and Gaza; Palestinian sales to Israel account for roughly four-fifths of all Palestinian exports while purchases from Israel account for about two thirds of all imports. In robustness checks presented in the Appendix we assess the robustness to increasing the size of the external market to respectively 25 and 50 million people.

> 18Our approach to accounting for access to external market is inevitably somewhat crude. We do not take into consideration potential time penalties associated with crossing the border nor do we quantify other transactions costs associated with crossing borders, including tariffs, obtaining travel permits etc. We also do not account for border closure days. Accounting for all of these additional factors would presumably only reduce our external market access measures. Put differently, our external market access proxies might be conservative in the sense that by not accounting for these additional frictions we allow for a maximal impact of external market access.

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