To see how the WB and Gaza grew under Egypt/Jordan and under Israel, and to see how catastrophic was Arafat's decision to launch his intifadah, go to http://www.gapminder.org/world
Check the box for West Bank & Gaza
You can see that 1967 was an inflection point in WB/Gaza prosperity. The data points become more widely spaced, as both GDP/capita and lifespan increased more rapidly than prior to 1967.
Let's look at lifespan first.
In 1966, the average Palestinian lived to the ripe old age of 51, 2 years ahead of the average Egyptian. 10 years later, the average Palestinian lifespan was 60 years, vs. 53 for Egyptians. By 1993 (Oslo), the Palestinian average was 70 (on par with eastern Europe, and having surpassed countries like Turkey, Iran and Brazil that had been ahead in 1966). At this level, rates of increases typically decrease.
The Palestinian average lifespan continued to rise monotonically and was 73 in 2007. In fact, this figure has increased monotonically - never dropping - throughout the Israeli occupation of the WB and Gaza.
Now let's look at GDP per capita.
As with lifespan, GDP per capita shows distinct improvement (wider spacing) after 1967, [Not in the GDP-only chart here - EoZ] and while the economies of Jordan and Egypt crash and incomes fall, the economy of the WB and Gaza forges ahead. In 1966, per capita income in Jordan was $2812; that of Egypt was $1879 and that of WB/G was $2500. Syria, Morocco and other non-oil Arab countries were peers. By 1976, after 10 years under Israeli control, WB/Gaza per capita income was $3565, vs. $2775 for Jordan and $2532 for Egypt. Jordan caught up for a while, but its performance (unlike that of the WB/Gaza under Israel) was extremely erratic, and it crashed again before 1993. By 1993, the WB/G figure was $6219, vs. $3524 for Jordan and $3774 for Egypt. The Oslo accords increased the growth rate significantly, so by 1999, the WB figure was $7865, vs. $4483 for Egypt and $3626 for Jordan. It had passed Turkey and Russia, left Syria and Tunisia convincingly behind and was closing in on Iran, Libya and Brazil. Most of its peers at this point were eastern European and Latin American emerging markets.
At this point, Arafat, observing the Israeli withdrawal from Lebanon, decided that a peace through negotiation wasn't sexy enough. He had to be a war hero and drive the Israelis out.
Boy, that sure worked out well.
When alumni of the intifadah say they don't want to see a return of the bad old days, they mean that they don't want to go back to hiding in basements. When the businessmen of the West Bank say that they don't want a return of the bad old days, they're thinking of the economic free-fall that occurred when due to Hamas suicide bombings, Israel stopped allowing Palestinian workers into the country, and criminal/terror gangs - often thinly disguised as "resistance" groups - took over the streets of WB cities and used them as terrorist staging areas. Per capita income crashed to $3124 by 2007 (but as lifespan continued to increase, there was no starvation).
The tool's data ends in 2007.
In 2007, the PA appointed Salaam Fayyad and started to restore law and order, although the process took time. As this progress became evident, Israel began to reduce measures, such as roadblocks, that had been necessitated by the PA's prior lack of interest in preventing terror attacks. Businessmen began to feel confident in the WB and began to invest in their businesses. Today, the growth rate is 5.5%. If the PA's crazed, politically-motivated decision not to allow workers to work in "settlements" - including east Jerusalem - or do business with them does not cause the WB economy to crash again, and if Abbas and his cronies don't lose control of the intimidation tactics (riots) that they're currently using, there's a chance that the WB will continue to recover. But under the best of circumstances, with a peace treaty miraculously signed and honored, it will still take decades to undo the damage done by the Arafat Intifailure. Prior to the Intifailure, many Palestinians benefitted directly from proximity to Israel, as Israelis came to the WB to shop and WB Arabs came to Israel to work and sometimes to study.
Those days are, as they say, history.