Six decades of the Israeli-Arab conflict: An assessment of the economic aspects

The article critically evaluates the literature that deals with the economic aspects of the Israeli-Arab conflict. The survey covers: (1) Data issues and lack of trustworthy time series; (2) the existence and causal direction of an arms race between Israel and its Arab neighbors; (3) the defense-growth nexus and possible spillovers from the defense industry to civilian sectors; (4) the effects of foreign aid; and (5) the dividends of a possible peace agreement. The survey concludes with recommendations for future research.