Potential Merchandise Trade of The West Bank and Gaza Strip

Abstract This research analyzes potential merchandise trade flows between the Palestinian Territories, the West Bank and Gaza Strip, and other markets, particularly those of the neighboring countries, Egypt, Israel and Jordan. The performance of the merchandise trade sector is examined subject to the current capacity of the Palestinian economy and after the removal of Israeli imposed non-tariff barriers. Two quantitative methods were employed: (1) trade similarity coefficients and (2) gravity trade equations for export supply and import demand. The empirical results indicate that merchandise trade flows from the West Bank are likely to double when non-tariff trade barriers imposed by Israel are removed.