GATT, trade, and growth

The GATT-sponsored dismantling of the heavily protectionist structures that took hold in the 1930s moved the world toward freer trade as it gradually opened up previously restricted markets. It supported renewed growth worldwide for three decades. In the 1980s, the world economy dragged under the weight of reduced trade and surging nontariff barriers to trade. The GATT lost effectiveness, and bilateral agreements began to take its place. In order to understand these events, we offer an endogenous-growth perspective that traces underlying sources of worldwide growth back to policy variables relating to trade among nations. We develop an open-economy endogenous-growth model and undertake various experiments that illustrate the growth mechanisms of the GATT and international trade, broadly conceived to include trade in goods and in ideas. -from Authors