Essays on protectionism and productivity

This dissertation studies the effects of changes in trade policy on productivity and the organization of production through a variety of theoretical mechanisms.;Currently the most commonly cited theoretical mechanism by which trade liberalization is thought to lead to increased productivity is reallocation toward more efficient firms. Intuitively, this reallocation of resources should increase aggregate productivity. But when productivity is measured in the model as it is measured in the data---as real value added per worker---this reallocation across firms does not increase aggregate productivity. What does increase measured productivity is efficiency improvements by individual firms. Once the model is augmented to allow for technology adoption, trade liberalization can cause substantial increases in measured productivity.;Standard models of trade---Ricardian, Heckscher-Ohlin, and monopolistic competition---suggest other mechanisms by which trade liberalization may lead to productivity increases or increased rates of economic growth. While opening to trade consistently increases social welfare in these models, it does not generally increase real GDP. It may actually decrease, or lead to slower rates of growth in, real GDP. To the extent that trade liberalization leads to increases in real GDP, it must do so primarily through mechanisms outside of those analyzed in standard models.;Much of the literature on firm-level analysis of trade focuses on the decision to export, less on how firms use imported inputs in production. Imported inputs are often crucial for production, particularly in small open economies. How do trade policies---ad valorem tariffs, quotas, and voluntary export restraints---affect the organization of production in such an economy? In a simple competitive model, these policies have no effect on the productivity and size distributions of firms, regardless of the importance of imported inputs in production. Changes in the prices of imported inputs are offset by changes in the wage rate so that the organization of production remains the same. Models need to allow for fundamental reorganization of production by individual firms in response to changes in trade policy.