Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 730: Trading Profiles and Developing Country Participation in the WTO Dispute Settlement System

Joseph Francois , Henrik Horn () and Niklas Kaunitz ()
Additional contact information
Joseph Francois: Johannes Kepler University, Linz
Henrik Horn: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Niklas Kaunitz: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: It has been alleged since its inception that the WTO Dispute Settlement (DS) mechanism is biased against developing countries, as manifested in e.g. allegedly too low rates of dispute initiation. To shed light on this issue, this study analyses the determinants of developing country participation in the DS system, using bilateral industry-level trade data, and a data set on dispute initiation that is significantly richer than what has been employed in the literature. But the study also points to a number of fundamental conceptual and data problems that beset the whole empirical literature that seeks to draw policy conclusions based on country participation in the DS system. While perhaps appreciated by researchers working in this area, these problems appear to go unnoticed by practitioners drawing on this literature.

Keywords: WTO; Dispute Settlement; Developing Countries; Dispute Initiation

JEL-codes: F13; F53; O19

75 pages, January 31, 2008

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