Essays On Globalization And Economic Growth

Globalization, characterized as enhanced trade integration among countries, has make nations vulnerable to forces emanating from their borders. The following essays contribute to the understanding of how forces of globalization interact with national economies. The first two chapters focus on a specific feature of globalization: the fragmentation of the production process across borders. The first chapter finds a novel way of solving a multistage version of Eaton and Kortum (2002)'s trade model, which contradicts previous findings that trade barriers have a larger impact when, not only final goods are traded, but also inputs along the production chain. Previous findings where based on unrealistic assumptions, that in this chapter are not made. The second chapter, estimates a multi-country version of the previous model, and evaluates the impact on the distribution of welfare among countries of eliminating trade barriers. The chapter concludes that when there is multistage production, eliminating trade barriers carries an increase in welfare inequality, while a classical one-stage production/trade model predicts a decrease in inequality. The final chapter of this dissertation focus on the relationship between human capital and the decision of whether to imitate foreign technologies or to innovate, in order to increase productivity. The papers suggests that differences on human capital endowments, makes technologies developed in advanced countries less productive in the developing world, and therefore, the optimal decision for firms in less developed countries, is to create their own technologies.