April 13, 2004
Arnold Kling
Andrew Rose has a paper entitled, Do We Really Know that the WTO Increases Trade?. His succinct Executive Summary: "No."
It turns out that membership in the GATT/WTO is not associated with substantially enhanced trade, once standard factors have been taken into account. To be more precise, countries acceding or belonging to the GATT/WTO do not have significantly different trade patterns than non-members.
I will be curious to see Peter Gallagher's take on this. Meanwhile, I find it plausible, since I think of these international trade organizations as just make-work for lawyers and bureaucrats.
For Discussion. Has anyone come across any discussion/criticism of Rose's empirical analysis?
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Subramanian and Wei, "The WTO Promotes Trade, Strongly but Unevenly", NBER W10024.
Hi Arnold,
I accept your challenge. But I may need a day or two to read the revised version of the Rose paper. Other 'made-work' is distracting me right now (thank goodness...).
Incidentally, I referred to the reponse to Rose from Wei and Subramaniam last year in this story. I see Kimon is also aware of this paper.
I'll be back to you.
Best wishes,
Peter
Contemporary world trade system is very far from libaral. This is very pragmatic system for rich countries. If we have this in mind, Rose´s results seem to be not very exciting. When I look at the world economy as a whole, it seems to me that nothing is how should be. I think that economic theory need a new definition of efficiency, which will be able to explaine why world economic system, together with its institutions, is not what economists expect, especialy liberal economists. I am working on it!
