Do We Really Know that the WTO Increases Trade?
HKIMR Working Paper No. 18/2002
38 Pages Posted: 27 Aug 2007
Date Written: October 2002
This paper estimates the effect on international trade of multilateral trade agreements: the World Trade Organization (WTO), its predecessor the Generalized Agreement on Tariffs and Trade (GATT), and the Generalized System of Preferences (GSP) extended from rich countries to developing countries. I use a standard gravity model of bilateral merchandise trade and a large panel data set covering over 50 years and 175 countries. An extensive search reveals little evidence that countries joining or belonging to the GATT/WTO have different trade patterns than outsiders. The GSP does seem to have a strong effect, and is associated with an approximate doubling of trade.
Keywords: empirical, bilateral, panel, gravity, GATT, GSP, international, multilateral, panel
JEL Classification: F13, F15
Suggested Citation: Suggested Citation