The GATT/WTO welfare effects: 1950–2015

• Main Authors: CHANG, Pao-Li, JIN, Wei, YAO, Kefang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: matching estimator; quantitative analysis; welfare; firm entry; income disparity; Growth and Development; International Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/1957; https://ink.library.smu.edu.sg/context/soe_research/article/2956/viewcontent/WTO_MR.pdf
• Institution: Singapore Management University

This paper evaluates the welfare effects of GATT/WTO-induced reductions in tariffs, vari-able and fixed trade costs, based on identified direct effects of membership indicators on trade flows via nonparametric matching estimations. The identification does not require the use of tariff data, which permits a comprehensive evaluation of the welfare impact of GATT/WTO for a long panel since its inception (1950–2015) of as many as 180 economies. The results indicate substantial (but highly dispersed) welfare gains across members of different development stages and increasing welfare losses of nonmembers in later decades by staying outside the system. An extensive set of robustness checks with respect to model specifications, parameter values, and matching estimations are provided. We also characterize the effects of GATT/WTO on cross-country income disparity, its complementarity with preferential trade agreements, and the welfare impacts of China’s WTO entry on the other economies.