The Sustainability of the WTO Dispute Settlement System: Does It Work for Developing Countries?

Our study provides an econometric analysis of whether developing countries are disadvantaged by the World Trade Organization's (WTO's) dispute settlement procedure. Despite the many successes of the Dispute Settlement Board (DSB), there is a need to better understand the overall effectiveness of the dispute mechanism. Using bilateral data of WTO members from 1995 to 2017, this article describes the influencing factors for developing countries' participation in the dispute settlement process. By conducting a rare events logistic regression analysis, the results from this study show that the key factors that determine the ability for a developing country to initiate a dispute against another country include the export intensity, retaliation capability, economic power, and economic threat from potential defendant countries. This means that not all developing countries can participate in trade dispute settlement mechanisms, so the WTO dispute settlement system has relative legitimacy. In addition, we further compare and analyse the influence of these four dimensions over different time periods and in different target countries through seemingly unrelated estimations.