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When trade stops: Lessons from the Gaza blockade 2007–2010

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  • Etkes, Haggay
  • Zimring, Assaf
Abstract
This paper uses detailed household expenditure and firm production data to study the welfare consequences of the blockade imposed on the Gaza Strip between mid-2007 and mid-2010. Using the West Bank as a counterfactual economy, we find that welfare declined by 14%–27%. Moreover, households with larger pre-blockade expenditure levels experienced larger welfare losses. We show that this large decline in welfare may be due to a combination of resource reallocation and reduced productivity. Workers were reallocated from manufacturing to services, and from industries that use imported inputs intensively, or export. In addition, labor productivity fell by 20% on average.

Suggested Citation

  • Etkes, Haggay & Zimring, Assaf, 2015. "When trade stops: Lessons from the Gaza blockade 2007–2010," Journal of International Economics, Elsevier, vol. 95(1), pages 16-27.
    • Handle: RePEc:eee:inecon:v:95:y:2015:i:1:p:16-27
    DOI: 10.1016/j.jinteco.2014.10.005
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    5. Gold, Robert & Hinz, Julian & Valsecchi, Michele, 2023. "To Russia with love? The impact of sanctions on regime support," Kiel Working Papers 2212, Kiel Institute for the World Economy (IfW Kiel).
    6. Michele Di Maio & Valerio Leone Sciabolazza, 2021. "Conflict exposure and health: Evidence from the Gaza Strip," Health Economics, John Wiley & Sons, Ltd., vol. 30(9), pages 2287-2295, September.
    7. Esposito, Federico, 2020. "Estimating the welfare costs of autarky: A sufficient statistics approach," Economics Letters, Elsevier, vol. 194(C).
    8. repec:wsr:wpaper:y:2022:i:196 is not listed on IDEAS
    9. Asghar Afshar Jahanshahi & Bakr Al‐Gamrh, 2024. "Beyond external pressures: How work conditions harm employees' social and environmental responsibilities," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4292-4309, July.
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    12. Ali Moghaddasi Kelishomi & Roberto Nisticò, 2021. "Employment Effects of Economic Sanctions," CSEF Working Papers 615, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    13. Elisa Giannone, 2018. "The Large Consequences and the Spillover Effects of a Small Shock," 2018 Meeting Papers 986, Society for Economic Dynamics.
    14. Dubey, Ram Sewak & Kang, Minwook, 2020. "Industrial subsidy policy and the optimal level of specialization," Economic Modelling, Elsevier, vol. 91(C), pages 81-88.
    15. Lee, Yong Suk, 2018. "International isolation and regional inequality: Evidence from sanctions on North Korea," Journal of Urban Economics, Elsevier, vol. 103(C), pages 34-51.
    16. Hinz, Julian & Monastyrenko, Evgenii, 2022. "Bearing the cost of politics: Consumer prices and welfare in Russia," Journal of International Economics, Elsevier, vol. 137(C).
    17. Stark, Oded & Kosiorowski, Grzegorz, 2020. "An Adverse Social Welfare Effect of Quadruply Gainful Trade," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 24(3), pages 207-235, September.
    18. Mikhail Mamonov & Anna Pestova & Steven Ongena, 2023. "'Crime and Punishment'? How Banks Anticipate and Propagate Global Financial Sanctions," Swiss Finance Institute Research Paper Series 23-59, Swiss Finance Institute.
    19. Bisharat, Khaled & Christ, Alexander & Kröner, Stephan, 2020. "Detrimental effects of an economic crisis on student cognitive achievement – A natural experiment from Palestine," Intelligence, Elsevier, vol. 79(C).
    20. Chui Ying Lee & Shinji Kaneko & Yuichiro Yoshida & Sun Hangcheng & Masaru Ichihashi & Katsufumi Fukuda, 2021. "Equivalence Gain of the Global Financial Crisis: A Note," Arthaniti: Journal of Economic Theory and Practice, , vol. 20(1), pages 111-121, June.
    21. Adnan, Wifag & Miaari, Sami H., 2018. "Voting patterns and the gender wage gap," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 222-247.
    22. Brück, Tilman & d’Errico, Marco & Pietrelli, Rebecca, 2019. "The effects of violent conflict on household resilience and food security: Evidence from the 2014 Gaza conflict," World Development, Elsevier, vol. 119(C), pages 203-223.
    23. Mikhail Mamonov & Anna Pestova, 2023. "The Price of War: Macroeconomic and Cross-Sectional Effects of Sanctions on Russia," CERGE-EI Working Papers wp756, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    24. Moyosore Olalekan Mohammed & Yanto Paulus Hermanto, 2020. "Israel Palestine Conflict: Implications of the Political Dynamics in the GCC," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(12), pages 485-493, December.
    25. Di Maio, Michele & Leone Sciabolazza, Valerio, 2023. "Conflict exposure and labour market outcomes: Evidence from longitudinal data for the Gaza Strip," Labour Economics, Elsevier, vol. 85(C).

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    More about this item

    Keywords

    Gains from trade; Economic sanctions; Gaza Strip;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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