Impact of Dispute Settlement System of World Trade organization on Trade Performance A Comparative Study of Development and Developing Countries

Abstract

The thesis investigates the impact of WTO dispute settlement system on trade performance across member countries. The study uses a systematic literature review supplemented by bibliometric analysis to categorize existing research into legalized and non-legalized studies, resulting in a thorough summary of the present state of knowledge in this field. The primary objective of the study is to determine if increased dispute initiations and differing dispute outcomes have a substantial impact on trade relations between member nations. The study uses a gravity model of trade with the new PPMLHDFE estimator to experimentally examine the correlation between WTO disputes and trade performance. This method takes into consideration the complexity of global trade flows while adjusting for a number of fixed effects. The research focuses on two key variables: dispute depth, which represents the number of disputes initiated per year, and dispute outcome, which captures how trade issues are resolved. The study finds that while the impact of deeper disputes on exports is not statistically significant, they are linked to a decline in imports. The observed asymmetry in the effects implies that the initiation of disputes might potentially influence the trade behavior of the importing countries more significantly. Contrary to forecasts the study shows that the dispute outcome have no major impact on trade flows between the participating countries. In addition, the study determines the ideal frequency of three dispute initiations in order to optimize trade benefit. This gives policymakers a mathematical framework for participating in WTO disputes in a way that balances trade rights and relations. Ultimately, this thesis offers evidence- based recommendations for policymakers interacting with the WTO dispute settlement system, shedding new light on the influence of the system on the trade performance of member nations. newline