Do International Trade Institutions Contribute to Economic Growth and Development?
55 Pages Posted: 1 Dec 2003
Proponents of trade liberalization routinely defend international trade institutions as engines of economic growth that benefit everyone. How trade proponents justify trade institutions matters because their justificatory rhetoric leads to certain policy conclusions about whether it is appropriate to link trade to environmental, labor, or human rights policies.
This paper examines the theory and operation of international trade law and institutions and questions whether these institutions in fact promote economic growth as proponents claim. Neither neo-liberal economic theory nor empirical studies support the claim that international trade institutions promote economic growth. To the contrary, international trade institutions are internally inconsistent and may distort economic efficiency and result in negative growth under some circumstances. To the extent that international trade institutions have promoted economic growth, they have often contributed to a growing disparity of wealth within and between the industrialized and developing countries.
Trade institutions like the WTO have succeeded in coordinating policies and resolving conflict through dispute-settlement, even if they do not necessarily promote significant economic growth. For this reason, it is entirely consistent with their policy-coordination function for these institutions to promote labor, human rights, and environmental standards.
Keywords: International trade institutions, economomic growth, development, world income disparties, linkage, labor, human rights, environmental standards
JEL Classification: F01, F10, O00, O1, O10, O19
Suggested Citation: Suggested Citation