The central concern of this thesis is to identify and analyse the circumstances in which international trade in second-hand machines will take place, and to describe the consequences of such trade. It turns out that this topic is not so esoteric as it may initially seem, and part of the thesis is devoted to exploring alternative models of trade in capital goods, and to showing the extent to which all such models exhibit common features. The method of approach is theoretical and largely mathematical, although some empirical data from secondary sources are presented. A survey of discussions of the desirability of underdeveloped countries importing second-hand machines reveals considerable differences of opinion, and the absence of a consistent theoretical treatment. The larger part of Chapter 1 is taken up by a theoretical analysis of international trade in vintage models of capital formation. Within a unified framework of perfect competition and perfect foresight, a wide range of technical assumptions can be treated, and their economic consequences analysed. Fairly weak assumptions lead to the conclusion that the existence of factor price differentials will cause countries with lower wage rates to specialise exclusively in the use of old machines. The rather meagre empirical evidence available, of which a major part is evidence of intranational trade in Japan, is consistent with the hypothesis that factor prices differentials are the main force underlying this trade, although the evidence is by no means conclusive. It seems a reasonable conclusion that it is a pervasive feature of vintage models with factor price differentials that trade in secondhand machines takes place and that there is a tendency for particular countries to specialise in the use of particular vintages. At this level of generality, however, not much more may be said. In order to investigate more deeply the implications of trade in vintage models, it is necessary to concentrate on more rigidly specified cases. Chapters 2 and 3 analyse steady states in the model in which the technical specifications of the only type of machine available are exogenously determined and there is labour-augmenting embodied technical progress: the 'clay-clay' model. With two countries growing at the same steady rate, the country with the lower yage rate and higher profit rate uses only second-hand machines. To analyse the effects of trade, we need to make some assumption about saving behaviour so that comparisons between steady states with free trade and steady states in autarchy may be made. In the literature on dynamic trade models, one of two assumptions is normally chosen: that (gross) saving rates are kept fixed, or that profit rates are fixed. In vintage models there is a third potential candidate, the net saving rate, but it is here shown that it is unsuitable, not providing a well-defined description of saving behaviour. Chapter 2 adopts the fixed gross saying rate assumption and establishes that if the two countries have saving rates sufficiently far apart for factor price equalisation not to occur and if there is convergence to steady state, then trade will in the long run raise the consumption level in the high saving country which specialises in new machines, and raise the wage rate and lower the profit rate in the low saving country which specialises in old machines. It may allow full employment in the low saving country even if in autarchy it was unable to sustain full employment. Examples show that consumption in the low saving country may be lowered by trade, and the factor price ratio in the high saving country may move in either direction. The alternative assumption that profit rates are fixed ('classical saving 1) is analysed in Chapter 3, where trade is shown to raise wage rates in both countries, and to affect consumption through a combination of three effects: (a) static gains from trade tend to raise consumption in both countries, (b) the country with the higher profit rate specialises in old machines so tending to raise its immediate consumption and reduce its long run consumption, while the other country does the opposite, if each country has an.efficient saving objective, (c) trade tends to reduce the consumption of the more inefficient country to the benefit of the one with the higher profit rate, if there is inefficient saving. Chapter 4 analyses similarly the putty-clay model, in which there is the possibility of choice of technique. Remarkably, the fact that the low wage country now has the possibility of constructing machines more technically labour intensive than those in use elsewhere does not alter the pattern of trade: in this case also, the only machines it uses are second-hand machines imported from the high wage country. A major point of interest in all three chapters is the effect labelled (b) above: the fact that trade in second-hand machines typically is associated with intertemporal substitution of consumption. This phenomenon has been noted in the literature on trade in the two-sector model, and Chapter 5 aims to show that it is a typical feature of models of trade in capital goods. The pattern of trade in the vintage models is shown to be analogous to the pattern in the two-sector model and in linear models. At first sight this aspect of trade may seem far removed from traditional trade theory, but in fact it is readily rationalised: countries with high profit rates and low saving rates are like impatient consumers, and trade allows them to reduce the capital intensity of their production and substitute consumption now for consumption later. It emerges from some examples in Chapter 2 and from the analysis of Chapter 5 that the classical saving assumption that steady state saving programmes are characterised by fixed profit rates is in several respects more satisfactory and illuminating than the assumption of fixed saving rates. There are many limitations to the methods used in the thesis: neither saving assumption is likely to be an accurate description of reality; the assumption throughout that both countries have the same steady growth rate is implausible; there are no transport costs; there is no real uncertainty; comparisons are made only between free trade and autarchy, with no discussion of tariffs; there is no discussion of the stability of steady states; the vintage models of Chapters 2 to 4 are all one-sector models; and producers are assumed to be perfectly competitive and perfectly prescient. But the most important limitation is the absence of the sort of empirical evidence that would permit one to reach detailed policy conclusions: evidence on the existence of significant externalities, on the input requirements of different machines (e.g. the skill requirements of maintenance), and on the hypothesis of ex-post absence of substitutability. The thesis cannot therefore produce detailed practical recommendations, or blanket endorsement or condemnation of imports of used machines. Rather the aim is to clarify the nature of the issues involved and show what sort of considerations are relevant, to describe the pattern of trade that may usuallyj though not invariably , be expected to emerge, and to show that trade in models of capitalist production typically involves issues somewhat different from, though related to, the traditional concerns of trade theory.

How do international trade and economic integration alter competitive pressures in economies. Can economic integration increase welfare by alleviating factor market distortions. What are the precise channels through which trade triggers welfare gains. This thesis examines how economic integration can alter competitive pressures in both product and factor markets. Endogenising product market imperfections, the new trade theory highlighted a number of previously unrecognised sources of gains from trade. This thesis will suggest that further gains from trade can be derived by endogenising factor market imperfections. Although these gains have been commonly alleged to by practitioners, they have hardly been formalised. Chapter 2 empirically assesses the importance of the various channels through which procompetitive gains from trade may be attained. Using a panel of 2400 Mexican firms between 1984-1990, it is shown that markups fell with trade liberalisation. It is also suggested that liberalisation has increased total factor productivity of the firms in the sample. The remainder of the thesis is of a theoretical nature. Chapter 3 focuses on the market for intermediate inputs in the presence of hold-up. In a closed economy, a bilateral monopoly is operating and inefficiencies arise in both product and factor markets. As the economy opens up to trade, procompetitive effects suppress the margin between prices and marginal costs increasing allocative efficiency. If downstream firms become internationally mobile, productive gains may arise from increasing returns to scale and intensified competition in the input market. Chapter 4 focuses on the unionised labour market. If countries are symmetric, trade will increase competition in the product market raising labour demand. The effect on wages is ambiguous. If firms are internationally mobile, the threat of firm mobility reduces both wages and unemployment.

This thesis examines the aid process to discover why aid so often fails. It does this through an investigation of the determinants of Canadian aid policy, the forces which have shaped the manner in which it has been implemented in Tanzania, and how this has affected the outcome of these efforts. The study examines in detail three significant policy decisions taken with respect to the Canadian aid programme in the past fifteen years: the decentralization and recentralization of aid administration 1989 - 1993; failed efforts in the DAC to further untie bilateral aid in 1999; and the termination of Canadian bilateral aid to Tanzania and the rest of East Africa in 1993. In addition, Canadian assistance in Hanang District, Tanzania between 1967 and 1999 is examined as a means to identify the numerous obstacles encountered by aid officials in the course of implementing aid agreements, and the forces which influence their decision-making process. Particular attention has been paid to the influence exerted on the Canadian aid programme as a result of its participation in international organizations like the Development Assistance Committee of the OECD and the World Bank. The study also identifies constraints on the effective use of aid resources inherent in the institutionalized processes of aid which inhibit the capacity of the Canadian International Development Agency to respond effectively to evidence of policy failure and improve aid practice. It is argued that bureaucratic processes have an enduring power to shape the policies they were designed to administer. In addition, that the institutional structure of the aid programme has made it extremely vulnerable to the pursuit of economic and political objectives which conflict with the stated purpose of Canadian ODA as an instrument for poverty alleviation in recipient countries.

This thesis tests the hypothesis that the degree of international competitiveness of the small European state in the 1980s resulted from its unique internal process of interaction derived from its industrial culture, developed from state priorities and societal values. Small European states, because of their position as international price takers, controlling relatively few product markets, were forced to rely on various forms of domestic intervention, such as monetary, labour market, and industrial policies, to stimulate international competitiveness. A systematised dialogue and communication process among internal economic actors due to geographic proximity and consequent actor familiarity was the small European state's competitive advantage necessary to compete for world markets against larger states possessing both natural and human resource advantages. The more systematised the internal interactive process was, however, the more flexible the internationally vulnerable small European state would be to respond to changing global political and economic conditions. In cases such as Sweden and Switzerland, the small European state was able to fashion this process of interaction into a system, where peak associations were able to communicate effectively to preserve a flexible industrial environment and where the principal actor maintained a key role in directing the national economy. The economic success of Sweden throughout the 1980s was facilitated by the trade unions, while in Switzerland the economy was guided by its financial institutions. Because of these principal actors, both states were highly independent, having developed oligopolised, high technology oriented industrial structures that featured powerful multinational corporations. However, during the 1980s, in small European states such as Denmark and Ireland, with weak industrial structures, high levels of international dependence on the European Community, and poor economic performances, confused consultation processes bred incoherent policy-making that resulted in low levels of international competitiveness. In both states, the State as the principal actor attempted to facilitate industrial adjustment, aspiring to modernise their relatively weak indigenous industrial structures. The thesis examines actor relations and policy-making in three functional areas: finance-industry relations and monetary policies; trade union-industry relations and supportive labour market policies; and state-industry relations and industrial policies. Given the myriad of policies that small state policy-makers employed during the 1980s, the thesis argues and illustrates that small European state interventionism was both state-specific and necessary because of the pressures of the world market.

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