Russia and the WTO: The "Gravity" of Outsider Status

IMF Working Papers, August 1, 2004

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With China's accession to the WTO in 2001, Russia is by far that organization's most prominent nonmember.
Using the gravity model, the paper gauges whether this "outsider" status has been affecting Russia's export structure.
On the basis of cross-section and panel regressions for 1995-2002, the authors find that Russian exports to WTO members have fallen short of the model's predictions.
The model points to Russia's further trade reorientation toward WTO members after a putative accession.
The results prompt ideas that may resolve the recent empirical controversy over the WTO's overall role in promoting trade.

Russian exports to WTO members are lower than predicted by the gravity model for the sample period 1995-2002.
The gravity model suggests potential additional reorientation of Russian trade toward WTO members conditional on accession.

Possible explanations discussed:
- Russia's exclusion from various WTO procedures.
- Own-export restrictions could produce a similar empirical effect (i.e., reduce exports to WTO members relative to model predictions).
The paper discusses how these mechanisms may account for the observed shortfall and how the findings bear on the wider debate about the WTO's role in promoting trade.

Accession to the WTO is associated in the model with further trade reorientation toward WTO members (implying potential gains from accession).
Identification of exporters' and policymakers' roles: addressing exclusion from WTO procedures or eliminating own-export restrictions could help align Russian exports with gravity-model predictions.

IMF Working Paper: "Russia and the WTO: The 'Gravity' of Outsider Status" (Y. D. Lissovolik, B. Lissovolik, August 1, 2004).