Post on 22-Jul-2016
description
Country Project - Israel
Group Members
Mayand Kumar - 1302-083 Mayank Kumar - 1302-084 Rahul Gupta - 1302-113 Rahul Panthri - 1302-114 Rajeev Tibarewal - 1302-116 Ravi Kumar - 1302-120
Overview
Introduction History
Geography
Economic Analysis International Trade Agreements Major Exports and Imports Gravity Model Factors affecting Trade Trade Barriers and its Impact
Introduction
Created on 14 May 1948 after expiration of British Mandate
1948 Arab-Israel war commenced on next day
Joined UN as a member on 11 May 1949
Geography:
• Lebanon (north)
• Syria (north-east)
• Jordan and West Bank (east)
• Mediterranean Sea and Gaza Strip (west)
• Egypt (south-west)
• Red Sea (south)
Introduction
Important cities: Jerusalem (capital) and Tel Aviv (financial center) Latitude: 31° 30’ north Longitude: 34° 45’ east Stretch: 424 km from north to south and 114 km from west to east
Economic Analysis
Fiscal Consolidation Strategy
Impact
Economic overview
• Major industries include• High technology products
• Metal products
• Electronics and biomedical equipment
• Agricultural products
• Transport equipment
• Telecommunication and semi-conductor
• Diamond industry is known for world’s center for diamond cutting and polishing
Gross Domestic Product
Soviet union crash create massive influx(.71 million) of Russian Jews to Israel with 60% of new arrival with college education.
Promoting venture capitalism with Yozma program a $100 million venture capital fund. Program convinced foreign venture capitalist backing hundred of startups a year by 2000.
Foreign Direct Investment
Establishing the image of High-Tech industry Berkshire Hathaway making its first ever acquisition
purchasing 80% of Israel company Iscar Eric Schmidt, Google’s Executive Chairman, has been a
frequent investor in Israel’s high-tech via his own private venture capital fund and has established a large engineering and sales operation in Israel
Intel has led the pack of some 400 global high tech giants which operate in Israel. Intel features, in Israel, four research and development centers, two manufacturing plants and investments in 64 Israeli start ups
Cisco just made its 11th Israeli acquisition, acquiring IntuCell for $475MN; IBM acquired WorkLight for $60MN, its 11th Israeli acquisition
Inflation
Spending huge amount on security; financing the expenditures and spending on settlements in the West Bank and on welfare payments to the ultra-Orthodox community
Persistent problem with balance of payment
International Trade Agreements
Israel has free trade agreements with Canada, Mexico, USA, European Union (EU), European Free Trade Association (EFTA) and MERCOSUR
Qualified Industrial Zone (QIZ) agreement with Egypt and Jordan
Protection of investment agreements with multiple nations like Argentina, China, Germany, India, Poland and South Africa
Avoidance of double taxation agreements with nearly 50 countries like Austria, Brazil, Canada, Denmark, France, India, Japan, Singapore etc.
Research and development agreements with India, Canada, US, UK, Belgium, China, France, Spain, Portugal etc.
Israel also has MFN (most favored nation) agreements with non-WTO members like Kazakhstan, Ukraine, Russian Federation and Uzbekistan
Major Exports and Imports
Major Exports and Imports
Major exported products:
• Cut diamonds
• Packaged and unpackaged medicaments
• Refined petroleum
• Software
• Chemicals
• Agricultural products
• Machinery and equipment
• Textiles and apparel
Major Exports and Imports
Major imported products:
• Rough diamonds
• Crude petroleum
• Military equipment
• Grains
• Consumer goods
Gravity Model
Regression Equation: yi=βo + βixi+εi Where i=1 to n
Dependent variable is Exports
Independent variables are FTA with countries, GDP, Population, Export and Human Development Index (HDI)
Regression Analysis
Countries Export(billion dollars) FTA GDP(billion USD)(Israel) GDP POPULATION(in Millions)(Israel) POPULATION( millions) Distance(km) HDI(Israel)United States 17.33 1 243.93 14991.3 7.91 315.085 10872.21 0.9
Turkey 1.71 1 243.93 774.8 7.91 75.620 882.11 0.9Canada 1.14 1 243.93 1777.8 7.91 35.060 9660.7 0.9
United Kingdom 3.55 1 243.93 2431.59 7.91 63.260 4035.02 0.9Russ ia 1.3 0 243.93 1899.1 7.91 143.700 5,994 0.9India 2.57 0 243.93 1872.9 7.91 1,217.000 4539.2 0.9Japan 1.4 0 243.93 5900 7.91 127.515 9094.53 0.9
Switzerland 0.56 1 243.93 659.3 7.91 7.950 2874.02 0.9Netherlands 2.3 1 243.93 836.1 7.91 16.730 4099.75 0.9
China 2.68 1 243.93 7,320 7.91 1,354.040 6326.75 0.9United States 22.6 1 217.334 14419.4 7.76 312.810 10872.21 0.899
Turkey 2.04 1 217.334 731.1 7.76 74.700 882.11 0.899Canada 1.1 1 217.334 1577 7.76 34.480 9660.7 0.899
United Kingdom 3.73 1 217.334 2260 7.76 62.510 4035.02 0.899Russ ia 1.13 0 217.334 1524.9 7.76 141.930 5,994 0.899India 2.66 0 217.334 1710.9 7.76 1,202.000 4539.2 0.899Japan 1.08 0 217.334 5500 7.76 127.799 9094.53 0.899
Switzerland 0.96 1 217.334 552.2 7.76 7.870 2874.02 0.899Netherlands 2.6 1 217.334 774.7 7.76 16.650 4099.75 0.899
China 3.51 1 217.334 5,930 7.76 1,347.350 6326.75 0.899United States 21.1 1 195.39 13898.3 7.62 310.540 10872.21 0.896
Turkey 1.49 1 195.39 614.6 7.62 72.750 882.11 0.896Canada 0.99 1 195.39 1337.6 7.62 34.120 9660.7 0.896
United Kingdom 2.23 1 195.39 2173.154 7.62 62.030 4035.02 0.896Russ ia 0.85 0 195.39 1222.7 7.62 141.920 5,994 0.896India 2.06 0 195.39 1365.4 7.62 1,186.000 4539.2 0.896Japan 0.87 0 195.39 5040 7.62 128.058 9094.53 0.896
Switzerland 0.72 1 195.39 509.5 7.62 7.780 2874.02 0.896Netherlands 2.1 1 195.39 796.3 7.62 16.570 4099.75 0.896
Regression Analysis
Regression Analysis
Free Trade agreements between countries are positively correlated
Population of Israel is positively correlated
Population of traded countries are negatively correlated
Geographic distance is negatively correlated
Human Development Index of other countries is negatively correlated
Factors affecting Trade
2004 – US-Israel Free Trade Agreement 2006 – Blockade Of Gaza Strip 2008 – Global Recession 2010 – EU-Israel Association Agreement includes agricultural trade 2010 – Israel reclassified as a developed market from emerging market 2011 – Foreign investors exited the stock exchange 2013 – Iran’s hampered trade with US and EU redirects trade towards Israel
Exchange Rate
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Exchange Rate
Average Rate
Exports
Imports
Balance of Trade
Capital Account
Current Account
Trade Barriers and its Impact
Quotas Israel has eliminated most of its tariff quotas except for 12 agricultural product
groups.
Tariffs Bound Tariffs on 75% of total
High Tariffs on agricultural products – average 73.3%
MFN tariffs average 7%(on agriculture goods – 24.5%)
Other duties and charges bound to zero on all products covered by tariff bindings
Trade Restrictions and its Impact
Import Taxes VAT – 16%(no VAT on fruits and vegetables)
Excise tax on fuel and cigarettes
TAMA for purchase tax
Licensing 203 items subject to licensing mainly for food and security concerns
Imports from 17 countries require special licensing
Agriculture and Chemical exports require licensing
Trade Restrictions and its Impact
Custom Duties Import declaration
Commercial Invoice
Bill of Lading
Certificate of Origin
Packing List
Import License
Permit or Certificates
Trade Restrictions and its Impact
High Tariffs lead to low domestic competition especially in the agriculture sector
Free Trade agreements help in enhancing competition – No tax policy have led to developments in service sector
FDI investments due to export incentives
Good relationships with EU and US
Struggles in regional trade due to geopolitical situation in the Middle-East
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