The Impact of the World Trade Organization: Evidence from China

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Abstract/Contents

Abstract: Since David Ricardo developed his theory of comparative advantage, it is a staple of elementary Economics that free trade between countries leads to all parties benefiting. General support for international trade has over time developed into the creation of organizations such as the General Agreement on Tariffs and Trade (GATT) and its successor World Trade Organization (WTO), which were created to encourage trade between partner countries. While there have been a multitude of economic studies about the value of such organizations, there is limited research about how they impact developing economies. As China joined the WTO in 2001, looking at how various industries and firms were differentially impacted by the WTO allows us to identify the winners of increased integration into the global economy. This paper will analyze the relevance of capital-intensiveness in how Chinese firms responded to the WTO. Using an immense database of firm level data in China, I determine that capital-intensive companies benefitted more from the WTO than their peers that depended on labor. More importantly, I call into question the prevailing belief in Western economic literature that labor intensive firms in China benefitted the most from greater global trade.

Type of resource	text
Date created	May 2018

Author	Hewett, Graeme Leighton
Primary advisor	Klenow, Pete
Degree granting institution	Stanford University, Department of Economics

Subject	Stanford Department of Economics
Subject	China
Subject	WTO
Subject	Capital
Genre	Thesis

Location	https://purl.stanford.edu/rm649pq3677

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Preferred Citation: Hewett, Graeme Leighton. (2018). The Impact of the World Trade Organization: Evidence from China. Stanford Digital Repository. Available at: https://purl.stanford.edu/rm649pq3677

Stanford University, Department of Economics, Honors Theses

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