Goldstein, Judith L., Rivers, Douglas, & Tomz, Michael. (2007). Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade (Vol. 61, 37-67): Cambridge Journals Online.
This article attempts to right a wrong. The wrong is the absences of a statistical link between membership in an international institution like the GATT and a decreased level of tariffs. See Milner 2005 and Rose 2004.
Goldstein et. al. deploy a statistical method that attempts to show that, while there is not a direct correlation between GATT membership and decreased trade tariffs, there is an important statistical connection if you broaden the circle of GATT members to measure the degree to which countries are embedded in the international system through agreements, etc.
The authors accomplish this by looking at two factors: institutional standing and institutional embeddedness (38). Standing is seen as being distinct from formal group membership, as some international agreements, “give rights and obligations not only to formal members, but also to territories and groups that never signed the agreement” (39). Goldstein et. al. also looks at member nations who are in negotiation with different international agreements, but who have not accented to full membership. “In summary, these nonmember participants received the core rights of the GATT/WTO, that is, access to other markets on MFN terms, and they reciprocated that right to other members of the organization” (42).
They then use a statistical method that standardized their country data using the gravity model of trade. Their results show that other examinations of this problem were too myopically focused on official, formal GATT/WTO membership while ignoring other variables that would affect country participation. When those additional variables are considered, statistical models will show a causal connection.
The table that sums up the whole project in a 3x3 format is Table 3. This shows the trade interaction between three groups of countries: formal member nations, nonmember participant nations, and non-participant nations. It shows a reduction in trade as the relationships move further away from the trade interactions of formal members and nonmember participants, dropping off whenever there is a trade interaction with non-participants. A table of countries and whether or not their participation is not included with the study, which would be helpful. An additional interesting table is Table 4, which shows the decreasing efficacy of subsequent trade negotiations in increasing trade.
