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West Bank and Gaza update (Árabe)

This newsletter is a quarterly publication of the West Bank and Gaza office. This issue features: Trade options for the Palestinian economy. The note quantitatively assesses different options for the future Palestinian trade regime, and, although it acknowledges the negative impact of movement restrictions on goods on the Palestinian economy, it also argues that the current trade, and fiscal regimes, significantly contributed to the poor trade performance observed in the West Bank and Gaza since 1994. The analysis suggests that liberal trade policies could be very beneficial for the Palestinian economy, indicating the high costs of the current Customs Union. The note explores extreme scenarios, such as the one of full trade liberalization, achievable within the framework of an autonomous trade regime, and, the analysis indicates there are considerable potential welfare gains from liberalizing Palestinian trade policies. Trade liberalization could help re-balance trade flows with Israel and the rest of the world, and therefore reduce the dependency of the Palestinian economy on all kinds of economic shocks occurring in Israel, as well as on Israeli security concerns. If the new trade regime could reduce transaction costs associated with such security concerns, the positive effects of trade liberalization already observed, would be significantly magnified.




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