Essays on globalization

This thesis studies how globalization affects people incomes through resource reallocation. We adopt a macro perspective and place special focus on the dynamic consequences of openness in a context of country asymmetry. In Chapter 1 we empirically show that heterogeneous economic activities within borders and their connectedness can be summarized in an indicator of economic complexity and are important determinants of income and growth in the long term. In Chapter 2 we show theoretically that while openness can yield immediate welfare improvements through static efficiency gains, the evolution of the economy over time can be harmed by original specialization. We explore the interactions of two asymmetric economies and show that when the technological differences are large, they may experience very different welfare paths when openness between them rises. In Chapter 3 we focus on the particular case of agricultural economies and present an explanation why they experience lagging purchasing power over the long run. In particular, we show that the fact that diversification happens at a lower rate in the agricultural sector can explain why these economies experience lower growth together with terms of trade deterioration.