Effect of the Accession to the World Trade Organization on Commercial Services Exports

Abstract

Abstract The literature on the trade effects of the membership in the World Trade Organization (WTO) has essentially focused on trade in goods, including goods exports. The present analysis has investigated the effect of the WTO membership on commercial services exports for 25 Article XII Members (i.e., countries that joined the WTO under Article XII of the Marrakesh Agreement establishing the WTO) over the period from 2005 to 2019. Results, based on the two-stage probit least squares estimator have revealed that the WTO membership increased significantly commercial services exports, including both modern and traditional services exports in Article XII members. The analysis has also used the two-step system generalized method of moments to investigate whether the WTO membership helped Article XII Members better perform than Non-Article XII Members in terms of commercial services exports, given that they undertook higher commitments under the General Agreement on Trade in Services than Non-Article XII Members. The findings have indicated that thanks to the WTO membership, relatively advanced countries among Article XII Members enjoyed both a higher commercial services export performance (including modern services export performance) and a higher degree of services export diversification than Non-Article XII Members. However their traditional services export performance remained, on average, the same as that of Non-Article XII Members. Less advanced economies among Article XII Members performed less than Non-Article XII Members in terms of commercial services exports, including modern and services exports, but they performed better than Non-Article XII Members in terms of traditional services exports. Meanwhile, their membership in the WTO did not result in a significant change in their level of services export concentration compared to that of Non-Article XII Members.