This brief is part of the Insights @ Center for Emerging Markets, a publication focused on cutting-edge ideas and advice for global leaders about emerging markets.

By Nuruzzaman Nuruzzaman (University of Manchester), Ajai Gaur (Rutgers University) and Rakesh B. Sambharya (Rutgers University). 

Trade organizations like the WTO help to reduce uncertainty and facilitate economic transactions by setting global rules that lower transaction costs. Moreover, in emerging economies with weaker institutions, the WTO can fill gaps and provide resources that are necessary for international trade expansion. For instance, the WTO oversees global trade regulations, facilitating trade among member countries according to established guidelines. Joining the WTO obligates countries to adhere to specific rules, including treating all members equally (most-favored-nation principle), capping tariffs, and ensuring policy transparency. 

Ideally, when a country becomes a member of the WTO, the companies in that country will have more trading opportunities to help them grow their businesses by providing better access to information on regulations and reducing trade barriers. Emerging economies can especially benefit from the resources provided by the WTO, such as training in trade negotiations and help in understanding and navigating trade agreements. 

However, the process of aligning with WTO rules can also bring challenges. Adapting domestic laws and building the necessary infrastructure can be costly and complex, creating uncertainties and risks for companies from emerging markets. For instance, after it acceded to the WTO in 2001, China experienced increased wait times at ports, specifically a two-day surge on average in Shanghai, due to a rise in import and export activity. Russia adopted WTO-aligned guidelines for meat processing and storage, but the approval process for such facilities in Russia remained complicated. And Kyrgyzstan's weak domestic institutions proved to be a barrier to implementing new trading rules effectively. 

The Role of Managerial Perception of Domestic Institutions 

Nurazzaman and colleagues considered how managers' perceptions of their own country's institutions impacted their willingness to increase international trade. They looked at survey data collected both before and after joining the WTO from four emerging economies (Laos, Montenegro, Russia, and Tajikistan). They compared the results to surveys from four countries that did not join the WTO (Azerbaijan, Bosnia and Herzegovina, Kosovo, and Serbia). The authors hypothesized that positive views of domestic institutions would make firms more likely to expand internationally.  

Results showed that managerial perceptions of the advantages of global trade are indeed an important factor shaping companies' ability to benefit from international trade agreements. Firms with managers who have a positive view of the domestic institutional environment exhibit a greater positive change in export intensity after accession to the WTO compared to firms with managers who have a negative or neutral view of the domestic institutional environment. Additionally, these firms show a greater positive change in export intensity compared to all firms in countries that do not join the WTO.  

Managerial and Policy Implications 

The study highlights the importance of cognitive mechanisms in managerial decision-making and the need for policymakers to ensure that regulatory reforms are well understood by managers. This could involve extending training and seminars beyond government officials to private sector managers. The findings emphasize the importance of domestic institutional quality and trust in improving the likelihood of success of trade agreements and increasing the value of supranational institutions like the WTO. 

Original Work 

Nuruzzaman, N., Gaur, A., & Sambharya, R. B. 2022. WTO accession and firm exports in developing economies. Journal of International Business Policy, 5: 444-466. 


If you are interested in learning more about this work, contact Professor Nuruzzaman Nuruzzaman at