On the Heterogeneous Trade and Welfare Effects of GATT/WTO Membership

42 Pages Posted: 25 Sep 2020

See all articles by Gabriel J. Felbermayr

Gabriel J. Felbermayr

Kiel Institute for the World Economy

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)

Erdal Yalcin

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute; University of Applied Sciences Konstanz

Yoto V. Yotov

Drexel University - Department of Economics & International Business

Date Written: 2020

Abstract

We build on the latest developments in the structural gravity literature to quantify the partial and general equilibrium effects of GATT/WTO membership on trade and welfare. Using an extensive database covering manufacturing trade for 186 countries over the period 1980-2016, we find that the average impact of GATT/WTO membership on trade among member counties is large, positive, and significant. We contribute to the literature by estimating country-specific estimates and find them to vary widely across the countries in our sample with poorer members benefitting more. Using these estimates, we simulate the general equilibrium effects of GATT/WTO on welfare, which are sizable and heterogeneous across members, and relatively small for non-member countries. We show that countries not experiencing positive trade effects from joining GATT/WTO can still gain in terms of welfare, due to beneficial terms-of-trade effects.

Keywords: GATT, WTO, heterogeneous policy effects, structural gravity, welfare

JEL Classification: F100, F130, F140

Suggested Citation

Felbermayr, Gabriel J. and Larch, Mario and Yalcin, Erdal and Yalcin, Erdal and Yotov, Yoto, On the Heterogeneous Trade and Welfare Effects of GATT/WTO Membership (2020). CESifo Working Paper No. 8555, Available at SSRN: https://ssrn.com/abstract=3699234 or http://dx.doi.org/10.2139/ssrn.3699234

Gabriel J. Felbermayr (Contact Author)

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Mario Larch

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

Universitätsstraße 30
Bayreuth, 95447
Germany
0049 / (0) 921 - 55 6240 (Phone)

University of Bayreuth ( email )

Universitatsstr 30
Bayreuth, D-95447
Germany

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Ifo Institute for Economic Research ( email )

Poschinger Str. 5
Munich, 01069
Germany

GEP at the University of Nottingham ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

Erdal Yalcin

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

University of Applied Sciences Konstanz ( email )

Alfred-Wachtel-Straße 8
Konstanz, 78462
Germany

Yoto Yotov

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

3141 Chestnut St.
Philadelphia, PA 19104
United States

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