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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