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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