Supporters of economic boycotts against Israel scored victories last month when South Africa and Denmark said they would ban the use of a "Made in Israel" label on products from Jewish settlements.

Pro-Palestinian groups hailed the moves as a potential watershed in efforts to persuade the international community to penalise Tel Aviv for its settlements in the West Bank and east Jerusalem, territories occupied by Israel.

Palestinians activists and their supporters acknowledge that targeting settlement businesses is merely symbolic and would do little to inflict economic pain on Israel.

To force Israel to end its occupation, Palestinian activists and their supporters say stringent, wide-ranging sanctions must be imposed. "We know these decisions do not carry significant economic consequences for Israel," said Ghassan Khatib, a spokesperson for the Palestinian Authority (PA), which administers Palestinian areas of the West Bank.

The settlements, which are illegal under international law, have become popular targets by activists trying to end Israel's 45-year military occupation over Palestinians.

Rona Moran, the research coordinator at Who Profits from the Occupation, an Israeli non-governmental organisation, said relative to Israel's economy, "the impact on Israel of these things would be minor because the production in the settlements is, well, peanuts".

Israeli authorities do not disclose precise data on the value of settlement goods and services produced, but settlements and about 20 industrial zones located inside them are believed to produce hundreds of millions of dollars a year worth of goods.

That is a fraction of Israel's estimated US$217 billion (Dh797bn) GDP.

Dror Etkes, an independent Israeli expert on settlements, said Israel's 500,000 settlers were a "very unproductive sector of society". He added that relatively few of them worked in the private sector, while anecdotal evidence suggests the rate of exports from the settlements was much less than the Israeli average.

Much of what settlers export to Europe is produce grown in settler-farming communities in the Jordan Valley-area of the West Bank. Like most settlements, they receive large state subsidies that reduce the impact of international boycotts. They benefit from laws in Israel that provide financial compensation to settlements for damages from financial boycotts.

Moreover, determining whether a product actually came from a settlement could pose difficulties for foreign countries.

Another problem is that settlers tend not to run private business. The number of them working in government jobs was twice the Israeli average, Mr Etkes said, adding that trying to penalise what little private sector existed in the settlements would "not have an impact on the Israeli economy".

Moreover, settlements employ tens of thousands of Palestinians, who would likely be the first to lose jobs because of settlement boycotts.

Still, in terms of symbolic value, Mr Etkes and others say a broader international effort to make a distinction between Israel and settlements would place serious political pressure on Tel Aviv.

Giving this a boost was South Africa, which in May gave notice to merchants "not to incorrectly label products that originate from the Occupied Palestinian Territory as products of Israel" because consumers should not be "misled" by incorrect product labelling. Denmark's Veterinary and Food Administration said it would impose similar rules on produce. In 2009, Britain allowed retailers to label West Bank goods according to whether settlers or Palestinians had produced them.

The changes result from pressure applied by the loosely knit civil society of Palestinian and international organisations that support the Boycott, Divestment and Sanctions (BDS) movement. Founded in 2005, it seeks to persuade the international community to impose such penalties on Israel and entities aiding its occupation and settlement project.

BDS efforts have earned successes recently, persuading international artists not to perform in Israel. They also have resulted in legal action against foreign companies aiding Israel's settlements and separation barrier.

While calling the decisions by South Africa and Denmark a success, Palestinian activists said the international community must do more. It must bring sweeping sanctions on Israelis of all walks of life to pressure them to change their government's policies towards the Palestinians, said Issa Amro, a non-violent activist from the West Bank city of Hebron.

"For me, I see every single Israel as responsible for my suffering and the restrictions on my freedom," he said.

Omar Barghouti, a Palestinian human-rights activist and founding member of BDS, said South Africa's involvement could have particular resonance given its history of overcoming apartheid.

Even if Israel did not suffer from settlement boycotts, the country's involvement in the issue would give the effort a "symbolic boost".

"Israel fears the growing support for BDS actions and measures in South Africa," he said, predicting the growing involvement of South Africans could "have a domino effect internationally, given what is seen by many as South Africa's moral leadership on the world stage".