Palmer had a slow start to his F1 career, but improved throughout the year and took his first point in Malaysia in October.
"I don't know if it took him a while to get his head around Formula One in a full-on season, get used to the cars and get used to this car, and how to get the best out of it," Bell told Autosport.
"I don't know if it was just a learning thing for him. It quite possibly was but either way he's shown real progress," Bell continued. "That's the important thing, whatever the reason behind it is."
Palmer will partner the incoming Nico Hulkenberg in 2017, and Bell feels he can carry on getting better.
"I don't think he's finished with that yet, he's going to keep improving," he said. "He'll learn from someone like Nico, which is another important factor, and he's prepared to learn which is good."
"He's got an open mind and he's gaining in stature all the time," Bell added. "If he keeps developing as he has done in the latter half of the season then he'll do well."
Bahrain International Circuit - Winter testing
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