International trade policy in Israel: Another model

✍ Scribed by Arye L. Hillman

• Book ID: 104642702
• Publisher: Springer US
• Year: 1992
• Tongue: English
• Weight: 331 KB
• Volume: 74
• Category: Article
• ISSN: 0048-5829
• DOI: 10.1007/bf00149184

✦ Synopsis

Unusual circumstances can give rise to economies with special characteristics. Leo Kahane has ventured, in the above paper, into the realm of one such economy, that of Israel, to study the determination of international trade policy. Kahane tests, using pre-1977 data on Israel, four theories of endogenous protection that have been previously empirically tested for the United States and Canada. Because a country's institutions and history influence economic and political decision making, a simple transplanting of theories and hypotheses can miss alternative more pertinent explanations, and in empirical studies the data and results may not be sufficiently discriminating to reveal the appropriate distinctions.

The indication of an important difference between the institutional settings of the U.S.A. and Canada on the one hand and Israel on the other is provided by the significance in Kahane's estimated equation of the variable indicating the prominence of output of Histadrut enterprises in a sector of the economy. The Histadrut, for which there is no close substitute in the United States or Canada, has played a leading role in influencing the manner of organization and the structure of the economy of Israel. As an alternative to the models of endogenous protection which Kahane uses to interpret his regression results, I shall propose a model that is consistent with the special institutional environment of the economy of Israel as reflected in the central role of the Histadrut.