The WTO Promotes Trade, Strongly But Unevenly
42 Pages Posted: 10 Aug 2005
There are 3 versions of this paper
The WTO Promotes Trade, Strongly But Unevenly
The WTO Promotes Trade, Strongly But Unevenly
Date Written: July 2005
Abstract
This paper furnishes robust evidence that the WTO has had a powerful and positive impact on trade, amounting to about 120% of additional world trade (or US $8 trillion in 2003 alone). The impact has, however, been uneven. This, in many ways, is consistent with theoretical models of the GATT/WTO. The theory suggests that the impact of a country's membership in the GATT/WTO depends on what the country does with its membership, with whom it negotiates, and which products the negotiation covers. Using a properly specified gravity model, we find evidence consistent with these predictions. First, industrial countries that participated more actively than developing countries in reciprocal trade negotiations witnessed a large increase in trade. Second, bilateral trade was greater when both partners undertook liberalization than when only one partner did. Third, sectors that did not witness liberalization did not see an increase in trade.
Keywords: Special and differential treatment, GATT
JEL Classification: F10
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
One Money, One Market: Estimating the Effect of Common Currencies on Trade
-
Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?
-
Does a Currency Union Affect Trade? The Time Series Evidence
By Reuven Glick and Andrew Kenan Rose
-
Does a Currency Union Affect Trade? The Time Series Evidence
By Reuven Glick and Andrew Kenan Rose
-
On Theories Explaining the Success of the Gravity Equation
By Simon J. Evenett and Wolfgang Keller
-
Estimating Trade Flows: Trading Partners and Trading Volumes
By Elhanan Helpman, Marc J. Melitz, ...
-
An Estimate of the Effect of Common Currencies on Trade and Income