Does the WTO Promote Trade? A Meta-analysis

Abstract

The World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), are key institutions of the multilateral trading system. While the WTO is generally assumed to promote trade by reducing tariffs and non-tariff barriers, existing estimates of its effect on trade vary widely in magnitude, sign, and significance. We collected 2,547 estimates from 71 papers and applied meta-analysis techniques to conduct a systematic quantitative review of the literature, complementing it with established advances in gravity models to obtain estimates of the WTO’s impact on trade. The meta-analysis shows that, on average, the literature finds a significant and positive trade effect of the WTO, although the estimates depend strongly on study characteristics. Moreover, we find no evidence of publication bias. Our structural gravity estimates confirm these findings: the WTO increases trade. However, the effects are heterogeneous across sectors and income levels of trading partners.