On the Effects of GATT/WTO Membership on Trade: They are Positive and Large after All

31 Pages Posted: 23 Jul 2019

See all articles by Mario Larch

Mario Larch

University of Bayreuth - Faculty of Law, Business and Economics; University of Bayreuth; CESifo; Ifo Institute for Economic Research; GEP at the University of Nottingham; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

José-Antonio Monteiro

World Trade Organization (WTO) - Economic Research and Analysis Division

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division

Yoto Yotov

Drexel University - Department of Economics & International Business

Date Written: 2019

Abstract

We capitalize on the latest developments in the empirical structural gravity literature to revisit the question of whether and how much does GATT/WTO membership affect international trade. We are the first to capture the non-discriminatory nature of GATT/WTO commitments by measuring the effects of GATT/WTO membership on international trade relative to domestic sales. These unilateral effects of GATT/WTO membership are found to be large, positive, and statistically significant. We also obtain bilateral GATT/WTO estimates, which are larger than those reported in the literature. In particular, our results imply that, on average, joining GATT and/or WTO has increased trade between members by 171% and trade between member and non-member countries by about 88%. We also find that although both GATT/WTO has been effective in promoting trade between members, the WTO has been more effective in promoting trade with non-members than GATT. A battery of sensitivity experiments confirms the effectiveness of our methods and robustness of our main findings.

Keywords: GATT/WTO, international trade, domestic sales, structural gravity

JEL Classification: F130, F140, F160

Suggested Citation

Larch, Mario and Monteiro, José-Antonio and Piermartini, Roberta and Yotov, Yoto, On the Effects of GATT/WTO Membership on Trade: They are Positive and Large after All (2019). CESifo Working Paper No. 7721, Available at SSRN: https://ssrn.com/abstract=3421148

Mario Larch (Contact Author)

University of Bayreuth - Faculty of Law, Business and Economics ( email )

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Bayreuth, 95447
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University of Bayreuth ( email )

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CESifo ( email )

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Ifo Institute for Economic Research ( email )

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Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

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José-Antonio Monteiro

World Trade Organization (WTO) - Economic Research and Analysis Division ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland
+41 22 739 5492 (Phone)
+41 22 739 5762 (Fax)

Yoto Yotov

Drexel University - Department of Economics & International Business ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

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