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Abstract
This dissertation investigates how exogenous shocks and policy interventions affect trade dynamics, sectoral interdependence and comparative advantage. The first chapter considers the COVID-19 pandemic in Brazil, using location-specific excess mortality as proxies for demand and supply shocks. Employing an instrumental variable strategy, it shows that trade responses depend on the origin of the shock and the structure of the trade relationships: foreign demand shocks reduced exports, while domestic and foreign supply shocks reallocated production toward external markets and facilitated imports through partners’ comparative advantage. The second chapter examines the effects of digital infrastructure on labor markets and trade. Exploiting the staggered rollout of broadband internet across Brazil (2010–2014), it finds that manufacturing sectors intensive in digital services inputs experienced significant employment and export gains, as well as import reductions. The results suggest that increased connectivity enhanced local services provision and reinforced downstream specialization. The third chapter develops and tests a theoretical framework integrating production subsidies into trade cost parameters. Using data from the Global Trade Alert and bilateral trade flows, the analysis quantifies how subsidies distort import patterns, with heterogeneous effects across sectors and time. Collectively, the dissertation advances understanding of the mechanisms through which shocks, technological change, and industrial policy jointly shape international trade and specialization in a globalized economy.