The Effect of Security-Motivated Trade Restrictions on Economic Activity and Political Violence
Francesco Amodio, Leonardo Baccini & Michele Di Maio
Project Description
To address security concerns, governments often implement trade barriers and restrictions on the movement of goods and people. While these restrictions are all but uncommon, their effect on the economy and political instability is not clear. In this project, Amodio, Baccino and Di Maio study the economy and politics of the Occupied Palestinian Territory (OPT) before and after the imposition of trade restrictions on behalf of Israel. Since the beginning of the occupation, Israel has been controlling the external trade of the OPT. Motivated by security considerations, in 2008 Israel started to severely limit the imports of selected goods and materials labeled as dual-use to the West Bank. Combining several datasets, a novel methodology, and rigorous econometric analysis, the researchers explore the effect of this policy. Results indicate that the import restrictions of dual-use goods and materials led to negative impacts on the economy of the OPT as well as to an increase of political violence. Funding: McGill SSH Internal Grant.