This paper incorporates risk into the FDI decisions of rms. The risk of FDI failure increases with the gap between the South's technology frontier and the technology complexity of a firm's product. This leads to a double-crossing sorting pattern of FDI firms of intermediate technology levels are...

This paper reexamines the GATT/WTO membership effect on bilateral trade flows, using nonparametric methods including pair-matching, permutation tests, and a Rosenbaum (2002) sensitivity analysis. Together, these methods provide an estimation framework that is robust to misspecification biases,...

This paper builds a dynamic model to examine the two-way interaction between FDI and the South's technology frontier. Inferior technology capacity in the South generates risk of production failure, which discourages inward FDI with high technology content. Only if the risk is not prohibitive...

This article clari…es the roles played by trade policy, in contrast with iceberg transport cost, in the popular setting of Melitz (2003), and characterizes the optimal reciprocal trade policy in such a setting. I show that import tariffs and iceberg transport cost are not equivalent in the...

This paper presents a theory on the endogenous choice of a country's education policy and the two-way causal relationship between trade and education systems. The setting of a country's education system determines its talent distribution and comparative advantage in trade; the possibility of trade...

LS Penrose’s limit theorem (PLT) – which is implicit in Penrose [5, p. 72] and for which he gave no rigorous proof – says that, in simple weighted voting games, if the number of voters increases indefinitely while existing voters retain their weights and the relative quota is pegged, then...

Rose (2004) showed that the WTO or its predecessor, the GATT, did not promote trade, based on conventional econometric analysis of gravity-type equations of trade. We argue that conclusions regarding the GATT/WTO trade effect based on gravity-type equations are arbitrary and subject to...

This paper provides a theoretical framework of dispute settlement to explain the surge in blocking incidence of GATT panel reports during the 1980s and the variations in withdrawn incidence versus total disputes across di®erent decades of the GATT regime. The study first suggests the role of...

This paper attempts to develop a formal economic framework to analyze the influences of domestic political considerations by democratic governments in shaping the WTO enforcement outcomes in the wake of a violation ruling against the defendant. Since a different mix of import and export sectors...

This paper proposes a general empirical framework to estimate the protection-for-sale model, where the protection regime shifts according to a sector's market structure (perfectly or monop-olistically competitive). We base the protection structure on Grossman and Helpman (1994) for the subset of...