Multilateral trade liberalization and developing countries’ economic exposure to shocks
Abstract
Purpose
The purpose of this paper is to examine the impact of multilateral trade policy (MTP) liberalization on developing countries’ economic exposure to shocks.
Design/methodology/approach
The analysis is conducted on a panel data set comprising 120 countries over the period 1996–2013 and uses the within fixed effects estimator.
Findings
The empirical results suggest that over the entire sample as well as sub-samples of least developed countries (LDCs) and non-LDCs, multilateral trade liberalization have a negative and significant impact on economic exposure to shocks. Interestingly, LDCs appear to experience the highest magnitude of the reducing impact of multilateral trade liberalization on countries’ economic exposure to shocks.
Research limitations/implications
These findings suggest that a greater cooperation among countries in the world, including among WTO members to further liberalize trade would surely contribute to reducing developing countries’ economic exposure to shocks.
Practical implications
The current study shows that the current backlash against trade and the consequent strong appeal for domestic trade protectionist measures would likely to undermine the likelihood of further multilateral trade liberalization. One implication of this could be a rise in countries’ economic exposure to shocks.
Originality/value
To the best of the author’s knowledge, this is first the study on this matter.
Keywords
Acknowledgements
This paper represents the personal opinions of individual staff members of the WTO and is not meant to represent the position or opinions of the WTO or its members, nor the official position of any staff members. Any errors or omissions are the fault of the author. The author of this paper has not made their research data set openly available. Any enquiries regarding the data set can be directed to the corresponding author.
Citation
Gnangnon, S.K. (2019), "Multilateral trade liberalization and developing countries’ economic exposure to shocks", Journal of Economic Studies, Vol. 46 No. 2, pp. 496-515. https://doi.org/10.1108/JES-05-2017-0141
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited