I was recently reading a dissertation on the impact of institutions, governance quality, and public spending on international trade. The first chapter of the dissertation discussed the WTO and the many studies done on the effects the WTO has had on international trade. One study from Andrew Rose cited in the dissertaion determined that the WTO had no significant economic impact on trade. After Rose released his study many other studies came out also trying to measure the impact of the WTO, a study from Balding had some interesting findings. He found the WTO did increase trade, however it did so unevenly across countries, in fact many countries experience no significant impact on trade. Balding's research also found that Rose's results for real total trade may have been more accurate than thought, however Balding found that after joining the WTO, a countries exports will increase, while imports remain constant or decrease. After reading this dissertation I further researched the WTO, what i gathered from the WTO's official website is that essentially the objective of the WTO is to facilitate trade agreements among member countries. The question that came to me after gathering all of this information is, is the WTO necessary? First off, it has differing impacts on its member countries, i suspect the countries that benefit aren't winners by accident. However whether the WTO is corrupt in favor of certain countries is another issue. My real question is, if the WTO doesn't have the impact they say they do, why do we need them, why can't the markets of each country decide who to trade with, instead of the politicians negotiating, since they obviously need a peer mediator (the WTO) to get things done. I suspect more free leaning markets could figure out trading issues amongst themselves, better than a group of politicians.
http://search.proquest.com/abicomplete/docview/304850017/141295D391F65C54710/1?accountid=28567
http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm
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