Chapter 14: The WTO and the Transfer of Policy Knowledge: The Case of Trade and Competition
* Oliver Morrissey and Doug Nelson INTRODUCTION Globalization and economic liberalization over the past two decades have contributed to expanding flows of trade, technology and capital between countries in both the developed and developing worlds. Trade liberalization at various levels has been a policy issue in almost all countries. Multilateral trade liberalization has become an institutional part of the globalization process, for good or bad. Important new issues were brought into the Uruguay Round and the World Trade Organization (WTO) has a broader remit than the General Agreement on Tariffs and Trade (GATT) it replaces. In particular, this remit extends to major ‘trade-related’ issues, impinging on investment, intellectual property rights, industrial policy, and the regulation of competition. The perceived benefits of liberalization are to enhance growth prospects via integration into the global economy and increased efficiency in resource allocation. At the root of arguments for liberalization are beliefs about the functioning of markets and, in particular, about their competitiveness (Metcalfe, Chapter 2 of this volume, provides a more general conceptual discussion of beliefs in economics). The WTO, at least implicitly, accepts these beliefs. The essence of this chapter is to examine how institutions like the WTO can influence the beliefs, regarding trade liberalization and competition, of policy makers in developing countries. By influencing beliefs, and thereby policy preferences, global institutions can affect policy choice and reform. Of course, altered beliefs are only one source of policy change – changes in government, or in the objectives of government, or in institutional and political...
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