Trade policy and industrial competitiveness

The study consists of three essays on current trade policy issues.;In the first essay, a dual economy model is adapted to consider the effect of provision of occupational safety and health standards in the context of a small open developing economy under the assumption that workers care about workplace amenities. It analyzes how free trade alters industries' incentives to provide workplace amenities related to occupational safety and health standards and discusses the economic consequences of policy intervention in mandating a minimum wage and/or a minimum standard in the context of this economy. The imposition of higher occupational safety and health standards in the economy will raise the production costs of an industry. However, the industry's competitiveness can, paradoxically, improve since the variable component of the total production costs can decrease as a result. An interesting conclusion is that, while capital owners always oppose any external effort to raise occupational safety and health standards, land owners and labor can take a different political stance depending upon whether the imposed standards are moderate or radical.;In the second essay, I develop a two-period investment model that incorporates the institutional dimension of protection to examine the incentive environment a protectionist program creates for a protected industry. It concludes that a protectionist program in a responsive institutional setting, where the policy-making process is susceptible to the persuasions of diverse interest groups and a consistent trade policy is hampered by distributional conflicts, is likely to impede the improvement in competitiveness by a protected industry. It also discusses how different firms face different incentives to adjust under a protectionist program.;The final essay discusses, in the context of many exporting sectors, how marginal institutional reforms ought to proceed when industries choose endogenously between two avenues to pursue for protection. The analysis shows that the welfare implications of marginal institutional reforms are isomorphic to the case of piecemeal tariff reductions and a set of analogous principles emerges.