MAS Occasional Paper No. 24, Sep 2002

Do We Really Know That The WTO Increases Trade?

By Professor Andrew K Rose, HAAS School of Business, University of California, Berkeley. This paper was prepared while Professor Rose was visiting the Economics Department, MAS, in August 2002.

Abstract

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 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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