Israel and the European Union - A Study on Trade and Integration

This study examines the impact that the association agreement between the European Union and Israel has had on Israel in terms of trade and specialization. The thesis concludes that Israel benefited from increased trade and specialization between 1995 and 2005, despite the macroeconomic instability that caused trade contraction in 2002-03. An important finding is that the increased international market for Israeli goods and services, created by the Euro-Mediterranean Partnership, allowed for an increased share of exports due to increased specialization of certain sectors. Commodities classified as manufactured goods were more affected by the improved access to the EU market, thereby increasing its shares in total exports and strengthening its comparative advantage. (Less)