WTO trade benefits: more evidence

“Arnold Kling(link to EconLog)”:http://econlog.econlib.org/archives/000242.html#000242 and “others(link to Tyler Cowan story)”:http://www.marginalrevolution.com/marginalrevolution/2003/week37/index.html#a0000270588 have pointed to the findings of a recent study funded by the National Bureau of Economic Resarch that suggests that the WTO may not do what many people would reasonably expect it to do: increase trade or reduce barriers to trade. Based on experience I found this an implausible result[⇒ related story]. Now I’ve found this detailed”>http://brook.edu/views/papers/wei/20030815.htm”>detailed rebuttal by two econometricians who praise the study for being ‘meticulous’ and ‘comprehensive’ but fault it on technical and design grounds.

” … We attempt to reconcile the apparent inconsistency between the well-entrenched belief in the benefits of the WTO and the conclusion of Rose’s analysis. We will furnish evidence that Rose’s analysis is incomplete and can be misread seriously. “

The authors, Shang-Jin Wei and Arvind Subramaniam, both from the IMF, argue that with appropriate adjustments, a more reasonable reading of the Rose gravity-model results shows that WTO may have increased world trade by 40 percent or $2.8 trillion in 2000.

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