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On the trade effects of GATT/WTO membership: They are positive and large after all

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  • Mario Larch
  • José‐Antonio Monteiro
  • Roberta Piermartini
  • Yoto V. Yotov

Abstract

The existing empirical literature on impact of GATT/WTO membership on international trade is mixed. This paper contributes to solving the puzzle of “the missing GATT/WTO effects” by adhering closely to the theoretical foundations of the gravity model of trade. Capitalizing on the latest developments in the empirical trade literature and building a new and large data set covering 186 countries over the period 1980–2016, we estimate a theory‐consistent gravity equation, which includes intra‐national in addition to international trade flows. We find that joining GATT/WTO increased partial equilibrium trade between members by 140%. Our methods also deliver novel estimates of the impact of GATT/WTO on trade between members and non‐member countries, indicating an increase of 72%. La littérature empirique existante sur l'impact de l'adhésion au GATT/OMC sur le commerce international est mitigé. Cet article contribue à résoudre l'énigme de « l'absence d'effets du GATT/OMC » en adhérant scrupuleusement aux fondements théoriques du modèle gravitationnel du commerce. En capitalisant sur les derniers développements de la littérature empirique sur le commerce et en construisant un nouvel ensemble de données couvrant 186 pays pour la période 1980‐2016, nous estimons une équation gravitationnelle cohérente avec la théorie, qui inclut les flux commerciaux intra‐nationaux en plus des flux commerciaux internationaux. Nos estimations d'équilibre partiel suggèrent que l'adhésion au GATT/OMC a augmenté le commerce entre les membres de 139 %. Nos méthodes permettent également d'obtenir de nouvelles estimations de l'impact de l'adhésion au GATT/OMC sur le commerce entre les membres et les non‐membres, montrant un augmentation de 72 %.

Suggested Citation

  • Mario Larch & José‐Antonio Monteiro & Roberta Piermartini & Yoto V. Yotov, 2025. "On the trade effects of GATT/WTO membership: They are positive and large after all," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(1), pages 281-328, February.
    • Handle: RePEc:wly:canjec:v:58:y:2025:i:1:p:281-328
    DOI: 10.1111/caje.12755
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    References listed on IDEAS

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