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Since July 2003, Israel has lifted its general prohibition on imports from WTO Members that had no diplomatic relations with it or prohibited imports from Israel. However, a licensing requirement remains in place for some other countries that prohibit imports from Israel. The agricultural sector is still highly protected, especially in comparison to industrial goods. The only exception to agricultural self-sufficiency is feed grains such as wheat and soybeans, where Israel is a net importer. MFN tariffs on agricultural products did actually rise more than 2.5 times from 1993 to 1999 with the adoption by the GATT's principle of tariffication. The huge tariffs protect all local producers, including those kibbutzim and Arab meat producers which are allowed to supply non-kosher meat. Because there are still tariff quotas on some product groups, there is some scope for lobbying the Ministry of Agriculture and Rural Development as well as the one of Industry, Trade, and Labour, which are the ones in charge of the administration of those quotas. Regarding textiles and wearing apparel, Israel has accepted since at least a decade that the survival of its firms under Israeli ownership and management implies that they have to be "de-localized" to neighbouring countries such as Jordan and Egypt. The process has taken place in an orderly way and is now almost completed. In our project we also tried to estimate the “Protection for sale” model for Israel. But, in this case we faced some serious problems resulting from limited availability of statistical data. The core estimation equation of the Grossman-Helpman model involves the inverse import penetration ratio as an explanatory variable that is clearly endogenous. The original modeling framework uses instrumental variables to overcome that problem. However, it was impossible to get a robust estimate of predicted import penetration ratios for Israel. The problems stemmed mainly from the lack of sectoral data on capital stock required to predict import penetration in a Heckscher-Ohlin, factor-intensity fashion. Thus, it was impossible to estimate the G-H model correctly using the original framework. Nevertheless, an attempt has been made to estimate the model neglecting the endogeneity problem. Estimates are in line with the theory only for the case of the export intensity ratio (i.e. share of exports in domestic production) 15
used as industry organization variable for both applied MFN tariffs and weighted average of applied duties (for preferential and non preferential imports). Poor performance of the G-H model may result from the fact that the Israeli government paid relatively little attention to organized lobbies or that they were poorly organized. Our results suggest that only the export oriented industries in Israel, managed – to a very limited extent - to exert some influence on the government and receive some tariff protection in the framework of preferential agreements. This statement has to be treated with extreme caution, since these estimates are not robust and are subject to statistical problems. Moreover, this policy was probably not a real obstacle in Israeli trade liberalization, since export oriented industries are, almost by definition, not seriously threatened by import competition. Perhaps, these results explain partially why Israeli governments managed to follow fairly liberal trade policies. Unfortunately, sectoral data, necessary to estimate G-H model, appeared to be unavailable for other more protectionist Mediterranean Partner countries. 3. Business environment: the causes and role of corruption in MPCs and NMS: ways for improvement The shape of tariff policy can be influenced by lobbies and vested interests groups, as shown in the previous research. But the real access to a given domestic market by foreign and domestic suppliers depends on business environment as well. Bureaucratic delays, costs, and the number of procedures to carry out business activities can severely limit the access to a given market. Thus, the unfavourable business environment can acutely restrict real liberalization of the economy and lead to distortions in production and consumption. The proliferation of unnecessary regulation can benefit narrow, but powerful groups inside the state administration with privileged access to legislature. With such actions, top bureaucratic officials may organize the business environment as to enrich 16
Page 1 and 2: In collaboration with: F E M I S E
Page 3 and 4: Table of contents INTRODUCTION AND
Page 5 and 6: Introduction and summary In the pro
Page 7 and 8: that of the NMS, we would observe a
Page 9 and 10: accession to the EU. Instead, a num
Page 11 and 12: trade area (FTA). The Agadir Agreem
Page 13 and 14: liberalization has taken five years
Page 15: signed Europe Agreements, EFTA and
Page 19 and 20: The main goal of the project was to
Page 21 and 22: Chapter 1: Assessing trade liberali
Page 23 and 24: Agricultural Policy (CAP). Further
Page 25 and 26: Agreements concluded with the MPCs.
Page 27 and 28: n lnTijt = ∑ k= 1 β RTAijt + α1
Page 29 and 30: Preferential trade liberalization i
Page 31 and 32: the EU enlargement, the EFTA lost t
Page 33 and 34: The most important of these was the
Page 35 and 36: The Definitions of the Variables an
Page 37 and 38: Estimates for the whole CEE sample
Page 39 and 40: agreements is, however, mixed. Whil
Page 41 and 42: The OLS estimates suggest that both
Page 43 and 44: Czech Republic Estonia Hungary Lith
Page 45 and 46: Czech Slovak Republic Estonia Hunga
Page 47 and 48: products. The provisions of the Eur
Page 49 and 50: foreseen to take effect in 2005. Ho
Page 51 and 52: Similar to the AMU, the ACC was for
Page 53 and 54: Unfortunately, the data on capital
Page 55 and 56: Table 2. The estimates for bilatera
Page 57 and 58: obust, while the dummy variable for
Page 59 and 60: Yi (partner) 0.944 1.009 2.267 1.96
Page 65 and 66: Agreements on the third countries a
Page 67 and 68:
Chapter 2: Grossman-Helpman Model I
Page 69 and 70:
N function (U ), given by: + ( ) u
Page 71 and 72:
ti 1+ ti xi Ii −α i mi = ⋅ ,
Page 73 and 74:
Probably the most extensive list of
Page 75 and 76:
eginning of 1990. But the tariff st
Page 77 and 78:
The non-preferential (MFN, conventi
Page 79 and 80:
have important impact on political
Page 81 and 82:
xi where ti is the tariff, ei is th
Page 83 and 84:
We can recover the structural param
Page 85 and 86:
Appendix Table 2 Estimation results
Page 87 and 88:
Table 4 Estimation results using mo
Page 89 and 90:
Testing Grossman-Helpman model for
Page 91 and 92:
practice most importers do not pay
Page 93 and 94:
countries were traditionally subjec
Page 95 and 96:
point to notify the US government o
Page 97 and 98:
and between 157% and 247% in 2004.
Page 99 and 100:
policy reforms. On the other hand i
Page 101 and 102:
Table 1 Estimation results for Isra
Page 103 and 104:
1995 0.00202 [2.04]** -0.00199 [2.0
Page 105 and 106:
extended to disaggregation of burea
Page 107 and 108:
The Importance of Corruption A subs
Page 109 and 110:
transition countries. Sekkat and Ve
Page 111 and 112:
society. In addition, they show tha
Page 113 and 114:
Johnson, Kaufmann, McMillan, and Wo
Page 115 and 116:
corruption. For example, upon grant
Page 117 and 118:
and criminal prosecution. On the ot
Page 119 and 120:
estimation are likely to be influen
Page 121 and 122:
levels have been used to derive fur
Page 123 and 124:
Union. In fact, the level of regula
Page 125 and 126:
Table 2 List of the Commonly Raised
Page 127 and 128:
Table 6 Predicted improvement (show
Page 129 and 130:
SB_PR all procedures required to re
Page 131 and 132:
AFGHANISTAN, ALBANIA, ALGERIA, ANGO
Page 133 and 134:
Brunetti, Aymo; Kisunko, Gregory an
Page 135 and 136:
Hines, J.R. (1995). Forbidden Payme
Page 137 and 138:
PellegriniI, Lorenzo and Gerlagh, R
Page 139:
World Bank (2005). Doing Business i
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