Abstract
Recent research has shown that the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO), contrary to common perceptions, does not increase trade. We argue that the effect of the GATT/WTO on dyadic trade flows is conditioned by the strength of market-protecting institutions (MPIs), which are the fundamental determinant of transaction costs. Dyads with weak MPIs do not see an increase in trade from GATT/WTO membership while dyads that have strong MPIs do see an increase in trade from GATT/WTO membership. In the former case, the benefits of GATT/WTO membership are outweighed by the high risk of doing business under weak market protection, but when property rights are well protected, GATT/WTO membership contributes positively to international trade. Empirical analysis of bilateral trade flows from 1948 to 1999 supports this hypothesis.
Original language | English |
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Pages (from-to) | 410-417 |
Number of pages | 8 |
Journal | International Studies Quarterly |
Volume | 57 |
Issue number | 2 |
DOIs | |
State | Published - Jun 2013 |
ASJC Scopus subject areas
- Sociology and Political Science
- Political Science and International Relations