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Possibilities of Promoting Employment and Trade Under Siege: The Case of the Euro-Palestine Partnership and Cooperation

Possibilities of Promoting Employment and Trade Under Siege: The Case of the Euro-Palestine... 1. INTI)I�U(:TI()N Since the fourth quarter of the year 2000, the West Bank and Gaza Strip (WBGS) experienced the following deep macroeconomic irnbalances: (1) persistent and continuous trade deficit, (2) huge deficit in the public budget, (3) high rates of unemployment, (4) increasing rates of inflation. According to the Palestinian-Israeli Economic Protocol (PIeN), signed between the PLO and the government of Israel in 1994, the PNA has less control on the stabilization policies to adjust the macroeconomic imbalances. In fact, PIEP granted the PNA linrited authority to run the economic activities in the WBGS, where it was not possible for the PNA to eiiiploy fiscal, monetary and trade policies. However, unilateral custom union envelope has remained the major determinant of the economic and trade relationships between Israel and the WBGS. Consequcndy, the levels of most Palestinian macroeconomic variables, such as interest rates, exchange rates, price levels and unemployment rates, have been determined subject to the Israeli economic conditions and interests. Also, the twin deficits in the WBGS have resulted from the dependency on trade deficits to finance the budget deficits. Therefore, it was not surprising to find the negative effect of macroeconomic and trade environments on investments. However, http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of World Investment and Trade Brill

Possibilities of Promoting Employment and Trade Under Siege: The Case of the Euro-Palestine Partnership and Cooperation

Journal of World Investment and Trade , Volume 8 (5): 24 – Jan 1, 2007

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References (7)

Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1660-7112
eISSN
2211-9000
DOI
10.1163/221190007X00125
Publisher site
See Article on Publisher Site

Abstract

1. INTI)I�U(:TI()N Since the fourth quarter of the year 2000, the West Bank and Gaza Strip (WBGS) experienced the following deep macroeconomic irnbalances: (1) persistent and continuous trade deficit, (2) huge deficit in the public budget, (3) high rates of unemployment, (4) increasing rates of inflation. According to the Palestinian-Israeli Economic Protocol (PIeN), signed between the PLO and the government of Israel in 1994, the PNA has less control on the stabilization policies to adjust the macroeconomic imbalances. In fact, PIEP granted the PNA linrited authority to run the economic activities in the WBGS, where it was not possible for the PNA to eiiiploy fiscal, monetary and trade policies. However, unilateral custom union envelope has remained the major determinant of the economic and trade relationships between Israel and the WBGS. Consequcndy, the levels of most Palestinian macroeconomic variables, such as interest rates, exchange rates, price levels and unemployment rates, have been determined subject to the Israeli economic conditions and interests. Also, the twin deficits in the WBGS have resulted from the dependency on trade deficits to finance the budget deficits. Therefore, it was not surprising to find the negative effect of macroeconomic and trade environments on investments. However,

Journal

Journal of World Investment and TradeBrill

Published: Jan 1, 2007

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