IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2510.14517.html
   My bibliography  Save this paper

The Economic Dividends of Peace: Evidence from Arab-Israeli Normalization

Author

Listed:
  • Mitja Kovac
  • Rok Spruk

Abstract

This paper provides the first causal evidence on the long-run economic dividends of Arab-Israeli peace treaties. Using synthetic control and difference-in-differences estimators, we analyze 1978 Camp David Accords and 1994 peace treaty between Jordan and Israel. Both cases reveal large and lasting gains. By 2011, real GDP of Egypt exceeded its synthetic counterfactual by 64 percent, and per capita income by 82 percent. Jordanian trajectory shows similarly permanent improvements, with real GDP higher by 75 percent and per capita income by more than 20 percent. The mechanisms differ: in Egypt, gains stem from a sharp fiscal reallocation together with higher foreign direct investment and improved institutional credibility, while Jordan benefited primarily through enhanced trade and financial inflows. Robustness and placebo tests confirm the uniqueness of these effects. The results demonstrate that peace agreements yield large, durable, and heterogeneous growth dividends.

Suggested Citation

  • Mitja Kovac & Rok Spruk, 2025. "The Economic Dividends of Peace: Evidence from Arab-Israeli Normalization," Papers 2510.14517, arXiv.org, revised Oct 2025.
    • Handle: RePEc:arx:papers:2510.14517
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2510.14517
    File Function: Latest version
    Download Restriction: no
    ---><---

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2510.14517. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.