Journal
WORLD ECONOMY
Volume 44, Issue 7, Pages 1944-1972Publisher
WILEY
DOI: 10.1111/twec.13109
Keywords
gravity model; international trade; World Trade Organization
Categories
Funding
- Conselho Nacional de Desenvolvimento Cientifico e Tecnologico
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This study used the gravitational model and Poisson Pseudo Maximum Likelihood estimator to estimate the impact of the WTO on new member countries from 1995 to 2014. It found that the WTO has promoted trade among new member countries, but the impact has been weak and unevenly distributed between developed and developing countries, as well as across different sectors examined.
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.
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