# _The effects of WTO membership through the lens of empiricism_

Empirical studies have not, so far, made a compelling case for (or against) WTO accession. A number of reasons could explain this failure: first, research has mainly focused on the case of China, and other experiences have been largely overlooked; second, most research was undertaken in preparation rather than in the aftermath of WTO accession (see for instance Tarr, 2007) – in other terms, authors typically focused on _estimating the potential_ of WTO accession rather than _measuring its effects_ (useful advocacy and policy-making tools in candidate countries, these studies did not necessarily shed light on the real economic impact of WTO accession); and a number of methodological issues made the task of economists particularly difficult, if not impossible (e.g. reforms are often undertaken over a decade in preparation for accession, but it is impossible to distinguish reforms that would have been undertaken unilaterally in any circumstances). Examples of this work include:

- For Bulgaria and Ecuador, Evenett, Gage, and Kennett (2004) used export data to evaluate the effect of WTO membership on the degree and security of access to foreign markets. With regard to Bulgaria, the authors found that the falling applied MFN rates (fostered by Bulgaria’s WTO accession) explained approximately one fifth of the country’s export growth to the Quad countries (i.e. Canada, the EU, Japan, and the US). For Ecuador, the authors concluded that export growth was higher in those product lines where the gap between MFN and GSP rates narrowed faster, suggesting that a reduction in the uncertainty over the terms of their market access to foreign markets had encouraged the country’s firms to ship more goods to the leading industrialized economies.

- For 25 transition economies during the 1990’s, Campos (2004) used empirical data to find that WTO membership had little impact on trade openness, FDI and growth, but a positive effect on domestic reform (external liberalization).

- For Russia, Lissovolik and Lissovolik (2007) tried to measure the cost of the “outsider” status. The authors found that Russian exports to WTO members during the 1995-2002 period have fallen short of their model’s predictions, and concluded that the impact of Russia’s accession to the WTO on structure and possibly the level of trade might be quite significant and much higher than the existing estimates.

- For transition economies in the field of services, Eschenbach and Hoekman (2006) found an inverse relationship between the level of GATS commitment and the “quality” of actual policy, suggesting that the argument in the literature regarding the lock-in and credibility benefits of WTO membership and commitments needed to be qualified. According to the authors, external enforcement incentives may be weak in cases of non-compliance by small/poor countries, as foreign exporters may perceive the net return of initiating disputes or invoking WTO disciplines to be inadequate. Other enforcement mechanisms, such as bilateral investment treaties, where they overlap with GATS commitments, are often preferred. Moreover, for EU accession candidates the GATS appeared as a largely redundant commitment device.

# **_2.3. The case of transition economies_**

The above empirical studies mainly focused on the case of transition economies. The analysis of the reasons behind WTO accession and the problems faced by new entrant countries, also suggests that some issues are specific to transition economies. Nonetheless, from a legal perspective, the GATT did not specifically identify transition economies: members are either treated as market or non-market economies. From a historical perspective, accession to the GATT/WTO has required from applicants some signs of willingness to depart from the socialist model; thus, non-market economies in the GATT/WTO are “de facto” in transition. Well defined

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