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DP3538 Do We Really Know that the WTO Increases Trade?

Author(s): Andrew K Rose
Publication Date: September 2002
Keyword(s): empirical , bilateral , panel , gravity , GATT , GSP , international , multilateral
JEL(s): F13 , F15
Programme Areas: International Macroeconomics , International Trade and Regional Economics
Link to this Page: www.cepr.org/pubs/dps/DP3538.asp


This Paper estimates the effect on international trade of multilateral trade agreements: the World Trade Organization (WTO), its predecessor the Generalized Agreement on Tariffs and Trade (GATT), and the Generalized System of Preferences (GSP) extended from rich countries to developing countries. I use a standard ‘gravity’ model of bilateral merchandise trade and a large panel data set covering over fifty years and 175 countries. Despite an extensive search, I am basically unable to find positive significant effects of GATT/WTO membership on trade. The GSP does seem to have a strong effect, and is associated with an approximate doubling of trade.

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