A Re-Examination of the Effect of GATT/WTO on Trade

The empirical literature on the effect of the GATT/WTO on trade provides ambiguous results. This paper sheds new light on this issue by re-examining the ex post (partial) effect of GATT/WTO membership on trade using multiple econometric specifications of the gravity equation and analysing several potential asymmetries of the GATT/WTO system. Our results show an uneven but pervasive evidence that membership in GATT/WTO have had an economically significant effect on members’ bilateral trade. Moreover, we find that the GATT/WTO effect operates through both trade margins but mainly through the intensive margin.