Munich Personal RePEc Archive

Accession to the WTO. Computable General Equilibrium Analysis: the Case of Ukraine. Part I.

Eromenko, Igor (2010): Accession to the WTO. Computable General Equilibrium Analysis: the Case of Ukraine. Part I. Published in: Ventus Publishing ApS No. ISBN 978-87-7681-664-3 (2010)

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Abstract

This book has two parts. The first part talks about general characteristics of the World Trade Organisation (WTO) as well as common steps that have to be taken during the accession process. Theoretical studies related to the WTO activities are also presented. Finally, Part I of this book discusses one of the most useful methods of examining economic consequences of being WTO member, namely Computable General Equilibrium (CGE) Models. Part II continues analysis and shows application of CGE model to a specific case study. It scrutinises accession of Ukraine to the WTO and discusses possible economic impact of such step. Concluding remarks for the whole book are given at the end of Part II.

This research studies the accession of a transition country to the World Trade Organization on the case of Ukraine. Quantitative results are obtained by building a Computable General Equilibrium model in the mathematical programming language General Algebraic Modelling System (GAMS). Four scenarios are simulated: 1) import tariffs reform; 2) improvement of exports access; 3) improvement of investment climate and 4) the scenario that combines previous three, or a full WTO accession. The results of the model show that in all scenarios there is growth of both exports and imports. By contrast, output and household consumption levels vary from scenario to scenario. The first two simulations, tariff reform and improvement of export access, show no significant change in domestic production and consumption. Thus, with expanded trade and practically the same output and consumption, Ukraine merely becomes more open and shifts to foreign trade. In the third scenario, improvement of investment climate has the most favourable results. Owning to better allocation of resources, both domestic production and consumption expand and the welfare of households increases by nearly 10% of consumption or 2% of Gross Domestic Product (GDP). The combined scenario shows a somewhat smaller but still significant improvement in welfare: over 8% of consumption or 1.8% of GDP.

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