Trading on the Margins: To What Extent Do Developing Countries Benefit from WTO Membership?

Building off of the analysis and statistical technique of Liu (2009), this paper examines the intersection between membership in the World Trade Organization and development status and their effects on the intensive and extensive margins of trade. This paper uses year by country pair panel data spanning the years 1950 to 2003 and covering 28,442 country pairs. Guided by the Helpman, Melitz and Rubinstein (2008) model of heterogeneous firms, this paper finds that the intersection between development status and WTO membership has a positive net effect on trade flows. Contrary to the previous literature, however, the net effects across the intensive and extensive margin are equivalent, suggesting that membership in the WTO both creates new trading partners and causes pre-existing partners to trade more