To address security concerns, governments often implement trade barriers and restrictions on the movement of goods and people. This paper studies the conditions under which these policies can backfire, and increase threats to security. Trade barriers generate negative externalities on targeted economies, decreasing the opportunity cost and increasing the supply of political violence. To test this hypothesis, we exploit the restrictions imposed by Israel on imports to the West Bank as a quasi-experiment. In 2008 Israel started imposing severe restrictions to the import of selected dual-use goods and materials, de facto banning a number of production inputs from entering the West Bank. We show that after 2008 (i) output and wages decrease in those manufacturing sectors that use those materials more intensively as production inputs, (ii) wages decrease in those localities where employment is more concentrated in these sectors, and (iii) episodes of political violence are more likely to occur in these localities. Our calculations suggest that the dual-use list policy accounts for 13% of the violent political events occurred in the West Bank in 1999-2014.
About the Speaker:
Leonardo Baccini, PhD, Trinity College Dublin
Assistant Professor, Department of Political Science, McGill University
Affiliated Faculty, Centre for International Peace and Security Studies
Affiliated Faculty, Institute for the Study of International Development
Research interests: international political economy, comparative political economy, international trade, international organizations