Jun 2, 2010

Tracing transhipments

As most Muslim countries do not buy goods from Israel but the latter has stuff to sell them, ingenuous smuggling networks have found a solution: disguise them as Egyptian goods. Egypt is one of the few Muslim countries that allows trade with Israel. The goods leave Israel officially as exports to Egypt from where they are re-exported to Muslim countries. Imports from Israel are found to be a statistically significant predictor of Egypt’s exports to Muslim countries, but not to the US, its main trade partner. This can be seen on the figure below which shows most products that Egypt imports from Israel are exported to Muslim countries, whereas they aren’t to the US.

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