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Consequences of conflict: the impact of the closure regime on the West Bank’s economy

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  • Agbahey, Johanes
  • Siddig, Khalid
  • Grethe, Harald
  • Boysen, Ole

Abstract

The Palestinian-Israeli conflict witnessed a new development in the mid-90s with the introduction of the closure policy. This policy consisting in roadblocks, and fixed and mobile checkpoints restricts the movement of goods and labor between the Palestinian territories and Israel, between the West Bank and the Gaza Strip, and inside the West Bank. As a result of this policy the economic space of the West Bank is divided into small pieces and trade with the rest of the world is distorted. The impact of the closure policy on the West Bank’s economy is largely understudied. Taking advantage of this unique context, this study addresses the economy-wide effects of removing the closures. The study uses a SAM developed for the West Bank for the year 2011 with explicit representation of trade and transport margins. A variant of the STAGE suite of CGE models is used and extended to conform the unique feature of the West Bank economy. From previous studies, it is estimated that the closure policy increases transaction costs and reduces productivity in the transportation sector by 30%. In this paper the removal of the closures is simulated through the reduction of the trade and transport margins by 30%, and the increase in efficiency in the transportation sector by 30%.

Suggested Citation

  • Agbahey, Johanes & Siddig, Khalid & Grethe, Harald & Boysen, Ole, 2016. "Consequences of conflict: the impact of the closure regime on the West Bank’s economy," Conference papers 332728, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332728
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    References listed on IDEAS

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