Quantifying the Uruguay Round

Abstract

The effects of the Uruguay Round are quantified using a numerical general equilibrium model which incorporates increasing returns to scale,  regions,  commodities, and steady state growth effects. We conclude that the aggregate welfare gains from the Round are in the order of $ billion per year in the short run, but could be as high as $ billion per year in the long run after capital stocks have optimally adjusted. Despite these global gains, we identify some developing countries that lose from the Round in the short run. In the long run, almost all gain, and the Round will allow developing countries to gain further through their own unilateral liberalisation. .  -  We begin with a presentation of our ' base ' model, which is static CRTS with  regions and  production sectors in each region, listed in Table . In order to assess the consequences of regional aggregation, for some simulations we also employ a -region aggregation of the base model.Except for tariff data discussed below, the data employed to calibrate the model come primarily from the GTAP database for  (Version ) # Royal Economic Society     [ " The elasticities of substitution for these value added production functions are taken from Harrison, Rutherford and Wooton ( ; table , p. ), which are unpublished estimates by Harrison, Jones, Kimbell and Wigle () from time-series data for the United Stated between  and . Contrary to many of the estimates employed in the CGE literature, the econometric specification used in this case corresponds to the functional form assumed in the model. # The available econometric evidence suggests values which are much lower than these (see Reinert and Roland-Holst () and Shiells and Reinert ()). But elasticities would be expected to increase over time, and this model assesses an adjustment of about  years, a rather long period in the context of these econometric estimates. # Royal Economic Society     [ ) We report welfare as a percentage of full GDP, where GDP is derived from the GTAP database. In Harrison, Rutherford and Tarr () welfare changes were reported as a percentage of private consumption, and hence were therefore somewhat higher. # Royal Economic Society  "! See Yongzheng et al. () and Tarr () for formal derivations of the welfare analysis. "" This is likely an overestimate of LDC quota rent losses from MFA elimination to the extent that it ignores rent dissipation costs in LDCs associated with these quota rents. See Hamilton (), Trela and Whalley ( b) and Tarr () for applied discussions of rent dissipation.

Completing the WTO Accession Negotiations: Open Loops in the Developing World

“…These comparative static results do not incorporate any potential gains from trade externalities and economies of scale. These gains are shown to be important (Harrison et al, 1996;Francois et al, 1996;and Yang, 1997). As we discussed earlier, WTO accession is likely to have profound implications for transition economies in terms of their economic and social institutions and the reform process.…”

The Payoff to America from Globalisation

“…35 This ratio can be considered the average effective ad valorem barrier (including tariff and non-tariff barriers). Using an AGE model based on Harrison et al (1997), the authors calculate that the removal of such barriers in the eight countries would increase US GDP by one per cent. 36 Scaled to 2003, this amounts to an increase of $110 billion in GDP, an additional $400 per capita or $900 per American household annually.…”

Modeling Distribution Services and Assessing Their Welfare Effects in a General Equilibrium Framework

“…We assume, as is standard, fixed proportions between intermediate inputs and value added and unitary substitution between all primary factors in the value added nest for all sectors, including distribution. On the import side, we follow Harrison et al (1997) and set the elasticity of substitution between aggregate imports and domestic goods to four and the elasticity of substitution between all imports to eight. Instead of the Constant Difference of Elasticity (CDE) demand system, designed to capture differential price and income responsiveness across countries, we follow Harrison et al (1997) and assume a Cobb-Douglas utility function.…”

“…On the import side, we follow Harrison et al (1997) and set the elasticity of substitution between aggregate imports and domestic goods to four and the elasticity of substitution between all imports to eight. Instead of the Constant Difference of Elasticity (CDE) demand system, designed to capture differential price and income responsiveness across countries, we follow Harrison et al (1997) and assume a Cobb-Douglas utility function. 10 Finally, when using the framework with competitive, explicit modeling of margins, we need substitution elasticities between distribution services and commodities.…”