How has the effect of the WTO on bilateral trade changed over time?

Abstract

Using the most recent data set on bilateral trade from 1962 to 2015 and a Pseudo Poisson Maximum Likelihood (PPML) estimator with and without country-pair fixed effects, this thesis shows the overall effect of WTO/GATT membership on bilateral trade has changed over time. Moreover, the results are different across the estimation methods. PPML with country-pair fixed effects shows that the WTO has statistically significantly positive effects on total bilateral trade before 2001 but has statistically significantly negative or statistically insignificant effects in the later period. The coefficients from PPML without country-pair fixed effects show that WTO membership has large trade promoting effects, although the magnitude of the effect has changed over time. Secondly, except for textiles, the effects of WTO membership on different types of goods mostly follow the same pattern. Lastly, over most of years in the WTO period, trade among developed countries is less than trade among other pairs.