What Does WTO Membership Kindle in Transition Economies?: An Empirical Investigation

Many believe that an important benefit from membership in international organizations is the lessening of political constraints to domestic reforms which would, ultimately, generate greater trade openness, FDI inflows and economic growth. These ideas have received limited empirical testing. This paper tries to fill this gap using panel data for 25 transition economies during the 1990s. We find that WTO membership had little impact on trade openness, FDI and growth, but a positive effect on domestic reform (external liberalization). Unfortunately, we can not yet distinguish whether this effect is real or due to the poor measurement of reform.