The impacts of the World Trade Organization on new members

Magnus dos Reis, Sabino da Silva Pôrto and André Azevedo

The World Economy, 2021, vol. 44, issue 7, 1944-1972

Abstract: In recent years, there has been intense debate on the effects of the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT) on global trade, triggered by Rose’s article (2004) suggesting that the WTO/GATT did not promote world trade at all. In addition, Subramanian and Wei (2007) pointed out a series of asymmetries in trade liberalization led by international organizations. In this paper, we estimate the WTO impact on new members considering both total and disaggregated trade flows from 1995 to 2014 using the gravitational model and Poisson Pseudo Maximum Likelihood (PPML) estimator. The sample includes bilateral imports from 133 countries in the primary, textile, and industrial sectors. This article provides strong evidence that the WTO has promoted new member trade, but weakly and unevenly between developed and developing countries and across sectors examined. Developed countries continued to benefit most from the increase in world trade promoted by the WTO, but more recent liberalization has also brought gains in exports to the group of the least developed countries (LDCs). Furthermore, the gains, although small, are concentrated in primary products.

Date: 2021
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