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On the heterogeneous trade and welfare effects of GATT/WTO membership

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  • Felbermayr, Gabriel
  • Larch, Mario
  • Yalçin, Erdal
  • Yotov, Yoto

Abstract

We build on the latest developments in the structural gravity literature to quantify the partial and general equilibrium effects of GATT/WTO membership on trade and welfare. Using an extensive database covering manufacturing trade for 186 countries over the period 1980-2016, we find that the average impact of GATT/WTO membership on trade among member counties is large, positive, and significant. We contribute to the literature by estimating country-specific estimates and find them to vary widely across the countries in our sample with poorer members benefitting more. Using these estimates, we simulate the general equilibrium effects of GATT/WTO on welfare, which are sizable and heterogeneous across members, and relatively small for non-member countries. We show that countries not experiencing positive trade effects from joining GATT/WTO can still gain in terms of welfare, due to beneficial terms-of-trade effects.

Suggested Citation

  • Felbermayr, Gabriel & Larch, Mario & Yalçin, Erdal & Yotov, Yoto, 2020. "On the heterogeneous trade and welfare effects of GATT/WTO membership," Kiel Working Papers 2166, Kiel Institute for the World Economy (IfW Kiel).
  • Handle: RePEc:zbw:ifwkwp:2166
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    Cited by:

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    3. Chen, Natalie & Novy, Dennis, 2021. "Gravity and Heterogeneous Trade Cost Elasticities," The Warwick Economics Research Paper Series (TWERPS) 1385, University of Warwick, Department of Economics.
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    More about this item

    Keywords

    GATT; WTO; Heterogeneous Policy Effects; Structural Gravity; Welfare;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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