Israel has a harsh dilemma. They want to keep their state (which is reasonable at this point), but on the other hand they don't want to share the power with Palestinians (which is not). They are also afraid that the Palestinian birth rate would have them outnumbered, and then what?. They use lots of tactics to ensure that the Palestinian population is confined --from import/export restrictions, to destroying their land for cultivation, to steadily expanding into other areas, etc. It's not genocide on the Hitler scale, but it's sure as hell, Ethnocide: http://en.wikipedia.org/wiki/Cultural_genocide

(That they "invested" into the area is laughable. What they did was they build companies to exploit cheap labour under very strict conditions. It's not like they enpowered any palestinians to become entrepreneurs. So it's investing in the same way Nike invested in building factories in Africa, etc.)