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Two concerns in international economics motivate the essays. I. Does foreign trade harm or foster growth? Two essays look at this question from dierent perspectives. The rst essay takes a dynamic general-equilibrium approach. Contrary to earlier partial-equilibrium models, the essay shows that trade can contribute to reducing the productivity gap between less developed and more advanced regions even if the advanced region hosts most of the innovative industries with dynamic externalities. Productivity may diverge in some cases. Even then both regions generally benet more from trade than they lose. The second essay investigates microeconomic eects empirically. It analyzes the channels through which trade has induced productivity change in Brazil after the country liberalized its tari act in 1990. The facilitated access to foreign inputs plays a minor role for productivity change. However, foreign competition pushes rms to raise eciency markedly. Counterfactual simulations indicate that this competitive push is a salient source of immediate productivity change. In addition, the shutdown probability of inecient rms rises with competition from abroad and exerts a positive 2impact on aggregate productivity over time. II. What role does information play in nancial markets? Evidence from nancia