I study the effect of international trade on aggregate efficiency to unpack the relationship between a country’s openness to international trade and its technological capabilities. I study this question by looking at how trade policy can be used as a tool to correct domestic distortions either coming from firm's market power (Chapter 2) or due to the presence of scale economies (Chapter 3). I argue that trade is a powerful tool to achieve efficiency gains. See the abstract of each chapter for more details on the contributions of each paper.