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The GATT/WTO has promoted trade, but only in capital-intensive commodities!

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This article uses gravity models to explore the impact of the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WHO) on bilateral trade in a sample of 46 countries over the period 1965 to 1997. Our data enable us to disaggregate trade by broad commodity aggregates. The results for total trade are similar to those reported by Rose (2004). However, the disaggregated estimates reveal that the GATT/WTO has had a positive and statistically significant impact on trade in capital-intensive commodities, but no statistically significant impact on trade in other commodities. The article demonstrates that simple modifications of Rose's approach lead to results that are much more 'common sense' than his (JEL F10, F15).

Document Type: Research Article


Affiliations: Department of Applied and International Economics, College of Business, Massey University, Palmerston North, New Zealand

Publication date: July 1, 2007

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