Export Competitiveness and Trade Agreements: Analysis and Insights from Israel’s Experience

Abstract

Israeli manufactured export performance has been on a growth path for the past two decades. This growth is partly due to the continuing shift in Israeli export specialization patterns from traditional products towards technology-intensified exports. However, Israel’s strong export competitiveness also derives from proliferating free trade agreements (FTAs) with its trading partners, especially the European Union (EU). This paper analyzes export statistics to provide data validating the positive impact of recent FTAs on Israel’s export comparative advantages across all sectors between 1995 and 2015. It employs an econometric framework to examine stability and specialization trends, as well as convergence. Furthermore, the authors add to the literature by performing a survival analysis, using the Kaplan-Meier Survival Rate model, to identify particular Israeli export sectors that have benefited from a longer pe- riod of competitive advantage than other sectors due to the EU-Israel Association Agreement