Kerry, Peres and Abbas agreed Kerry's economic proposal would not replace a political solution to the protracted Israeli-Palestinian conflict.
"The truth is that when considering the security of Israelis or Palestinians, the greatest existential threat and the greatest economic threat to both sides is the lack of peace," Kerry said at the economic forum on the shores of the Dead Sea in Jordan.
"To not try to head these off would be tragic and it would be irresponsible."
Kerry said economic experts working with the Middle East Quartet -- the United Nations, the United States, the European Union and Russia -- had drafted a plan to assemble $4 billion in private-sector investment in the Palestinian Authority.
"It is a plan for the Palestinian economy that is bigger, bolder and more ambitious than anything proposed since Oslo, more than 20 years ago," Kerry said, referring to secret 1992 Israeli-Palestinian talks in the Norwegian capital that led to the first face-to-face agreement between Israel and the Palestine Liberation Organization Sept. 13, 1993.
The Oslo I Accord was signed by Abbas for the PLO and Peres for Israel.
Kerry said the "shovel-ready" projects he proposed in such areas as tourism, agriculture and building materials could boost Palestinian gross domestic product 50 percent and cut unemployment two-thirds to 7 percent from 21 percent in three years.
"As long as prospects for economic advancement remain weak, so do the prospects for peace and stability," he said.
The money would come from the private sector, not U.S. taxpayers, and the program would be led by quartet Special Envoy Tony Blair, Britain's former prime minister, Kerry said.
"I am happy to say that both Prime Minister [Binyamin] Netanyahu and President Abbas support this initiative, knowing that just as people find the dignity in a good job, a nation finds pride by functioning and growing an economy that can stand on its own two feet. This will help build the future," Kerry said.
The U.S. State Department would not identify participating companies or provide other details about the proposed investments.
Blair and billionaire U.S. private-equity investor Tim Collins, a friend of Kerry's, recruited business leaders to join over the past six weeks, The Washington Post reported.
Coca-Cola Co. Chairman and Chief Executive Officer Muhtar Kent is one of the recruited business leaders, Palestinian media reported.
Kerry spoke after a speech by Abbas, recounting the obstacles to peace, and one by Peres, urging Palestinians to sit down for direct peace talks now.
Abbas said that besides refusing economic proposals as a replacement for a free and sovereign country, Palestinians would also refuse "a temporary state, with temporary borders," referring to a proposal in which Israel agrees to borders for 50 percent of Palestine with a promise to revisit the issue in 15 years.
Abbas praised the Arab Peace Initiative as a vital a comprehensive peace proposal. Introduced by Saudi Arabia in 2002 and endorsed again by Arab diplomats in 2007, the initiative offers Israel full recognition and normalization with all Arab nations in exchange for withdrawing to its 1967 borders, including leaving East Jerusalem, and "just settlement" for Palestinian refugees who wish to return home to live in peace or receive compensation.
"So what are we waiting for?" Abbas said. "We plead with you. Just read these two pages."
Peres said Israel had "no country, no leader, that we consider an enemy."
He urged his "dear friend" Abbas to sit down to discuss peace, even with their important differences.
"You'll be surprised how much can be achieved in open, direct and organized meetings," Peres said.
"President Abbas, you are our partner, and we are yours," Peres said. "We can and should make the breakthroughs."
Peres applauded Kerry's economic ideas as "imaginative," but agreed with Abbas they were not a replacement for peace negotiations.
The two men met on the forum's sidelines, their first meeting in more than a year.
In Jerusalem, several politicians derided Peres for calling for an immediate resumption of peace talks.
"I didn't know that Peres became the government spokesman," Strategic Affairs Minister Yuval Steinitz said ahead of a Sunday night Cabinet meeting.
Tourism Minister Uzi Landau called any suggestion to return to Israel's boundaries to 1967 lines, even with land swaps, "Auschwitz borders," referring to a term used in 1969 by Abba Eban, Israel's foreign minister at the time.
But Environmental Protection Minister Amir Peretz said "any diplomatic agreement will certainly be based on '67 lines and land swaps."
Beyonce flaunts bikini body, Blue Ivy in vacation pics
Couple mistakenly served bag of cash at McDonald's drive-thru