Working Paper

On the Heterogeneous Trade and Welfare Effects of GATT/WTO Membership

Authors

  • Erdal Yalcin
  • Gabriel Felbermayr
  • Mario Larch
  • Yoto V. Yotov
Publication Date

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.

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Info

JEL Classification
F1, F13, F14

Key Words

  • GATT
  • welfare
  • WTO

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