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Economic cooperation despite of political conflict: Israeli traders’ perception of Israeli-Palestinian food trade

  • Geesche M. Merkle

    (Georg-August University Göttingen)

  • Rico Ihle

    (Georg-August University Göttingen)

  • Yael Kachel

    (Israeli Ministry of Agriculture and Rural Development)

  • Ulf Liebe

    (University of Cambridge)

The ongoing political conflict between Israel and the Palestinian territories results in an increasing physical separation and societal alienation of both conflicting parties. In some contexts such as trade ongoing cooperation exists. We provide a micro-level analysis of economic interactions between Israeli and Palestinian wholesale traders of fruits and vegetables. We use a unique dataset gathered by a quantitative survey among Israeli wholesale traders in order to obtain evidence on their perspectives on this economic exchange. Trading patterns show vivid economic exchange of mainly informal character. Logistic regressions suggest that education and the personal social network play vital roles for the existence of Israeli-Palestinian trading relationships. Israeli traders feel not affected by the conflict but wish for its quick settlement. A low level of transaction problems is reported. They are mainly caused by the political and security situation and by the payment behavior of the Palestinian trading partners. Daily contacts of economic agents lead to continuous economic cooperation despite of ongoing political conflict and improve the perception of the actors of the other party.

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Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 151.

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Date of creation: 26 Sep 2013
Date of revision:
Handle: RePEc:got:gotcrc:151
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  1. Chaim Fershtman & Neil Gandal, 1996. "The Effect of the Arab Boycott on Israel: The Automobile Market," CARE Working Papers 9607, The University of Texas at Austin, Center for Applied Research in Economics.
  2. Polachek, Solomon & Xiang, Jun, 2010. "How Opportunity Costs Decrease the Probability of War in an Incomplete Information Game," International Organization, Cambridge University Press, vol. 64(01), pages 133-144, January.
  3. Paolo Masella, 2013. "National identity and ethnic diversity," Journal of Population Economics, Springer, vol. 26(2), pages 437-454, April.
  4. Miaari, Sami H. & Sauer, Robert M., 2006. "The Labor Market Costs of Conflict: Closures, Foreign Workers, and Palestinian Employment and Earnings," IZA Discussion Papers 2282, Institute for the Study of Labor (IZA).
  5. Rico, Ihle & Rubin, Ofir D., 2011. "Movement Restrictions, Agricultural Trade and Price Transmission between Israel and the West Bank," Discussion Papers 117021, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  6. Ifat Maoz, 2011. "Does contact work in protracted asymmetrical conflict? Appraising 20 years of reconciliation-aimed encounters between Israeli Jews and Palestinians," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(1), pages 115-125, January.
  7. HÃ¥vard Hegre & John R Oneal & Bruce Russett, 2010. "Trade does promote peace: New simultaneous estimates of the reciprocal effects of trade and conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(6), pages 763-774, November.
  8. Sebastian J. Goerg & Jan Meise & Gari Walkowitz & Eyal Winter, 2013. "Experimental Study of Bilateral Cooperation Under a Political Conflict: The Case of Israelis and Palestinians," Cologne Graduate School Working Paper Series 04-01, Cologne Graduate School in Management, Economics and Social Sciences, revised 21 Oct 2013.
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