In this study, we use both a macroeconometric model and a computable general equilibrium model (CGE) to evaluate the impact on Taiwan of admission to the WTO. We use the macroeconometric model to predict the future change in Taiwan’s economy and the possible impacts of WTO admission on macroeconomic variables. The CGE model, a comparative static approach, is used to evaluate the direct and indirect impact on each of the sectors in the economy.
We evaluate the impact from 1995 to 2000, and find that the longer the period examined, the more significant the benefit is. The GDP growth rate in the year 2000 could rise from 5.58% to 6.19%. Under a scenario of unilateral trade liberalization and factor immobility, the agricultural and automobile sectors are two sectors which will suffer because they have been protected in the past. The loss is reduced when the time horizon is longer and production factors become freely mobile among sectors. When multilateral trade liberalization, the essence of the WTO, is realized, most sector will increase their exports. The agricultural sectors could also benefit rather than suffering and the automobile sector could reduce its loss.
