In itself? Not really. But if you add violence to the mix and the subsequent curfews, checkpoints, all the incitement to hate, the unemployment, the occasional gun battle...yes, it can all add up to a very serious detrimental effect.
Most of the aspects of "the occupation" you point to that are detrimental are actually aspects of the recent Intifada. Prior to that the thinking was that if Palestinians were economically prosperous, they would be more inclined to make peace because they would have more to lose otherwise, so there had been a long period of building up their economy. That all came to an end when Arafat thumbed his nose at peace (and victory, if we believe his goal was a Palestinian state) and called for the Intifada.
The Intafada has been terrible on the Palestinian-Arabs. Violence, battles, death, the breakdown of society, the erosion of social services, poverty, unemployment, checkpoints, curfews...on and on. By contrast, the occupation has been a fact of life for almost 40 years, there have been cycles of peace, economic growth, good relations...then there has been bad times. What needs to be kept in mind is the good times could have culminated with Palestinian independence back in 2000.
I think you really need to poke a stick in your eye to avoid seeing a lot of information in order to maintain the opinions you do. At some point one has to wonder why it’s so important to you to cover your eyes and plug your ears and avoid learning of anything that hints at an Arab contribution to the conflict, yet glom onto anything that suggests Israeli responsibility. My personal theory is you’re a hard-core bigot who can’t help himself. I think you honestly believe everything you say, but something in your brain just acts as a filter and you’re just incapable of absorbing and processing information that might lead you to sympathize with the Israeli/Jewish position. Honestly, if you read Irving, this filter in your head would probably cause you to identify with him and his work.