How did you come to choose your research topic?
Even before pursuing a PhD, I have always been interested in how trade policy can improve economies and people’s lives, especially in the context of developing countries. The shocks or policies studied in my thesis offered real-world “natural experiments” that allowed me to explore the effect of trade dynamics and their policy implications from different perspectives.
Can you describe each chapter of your PhD thesis?
Chapter 1, “Trade Responses to Aggregate Shocks: Evidence from the COVID-19 Pandemic in Brazil”, looks at how simultaneous shocks affect local trade activity, using the COVID-19 pandemic as a natural experiment. In this chapter, I use local and foreign excess mortality rates as proxies for supply and demand shocks, combined with an instrumental variable approach to study their impacts on Brazilian municipalities. I find that the pandemic’s effects on trade varied depending on the place origin of the shock: higher mortality in export destination countries reduced Brazilian exports, whereas higher mortality locally and in import origin countries redirected excess production abroad and boosted imports.
Chapter 2, “Digital Services as Intermediate Inputs: Evidence from Brazilian Manufacturing”, examines the relationship between manufacturing and services sectors in the context of a broadband expansion policy in Brazil between 2010 and 2014. Together with my co-author, Karolina Wilczyńska, we combine data on trade and local labour markets to estimate the effects of improved connectivity on manufacturing sectors that rely heavily on digitally tradable services as inputs. We find that these industries created more jobs, exported more, and imported less, relative to less digital-intensive industries. Better broadband connection also strengthened the local provision of digital services and allowed manufacturing firms to specialise.
Finally, Chapter 3, “Reshaping Comparative Advantage: The Effect of Subsidies on International Trade Shares”, investigates how domestic subsidies affect trade patterns and potentially distort comparative advantage. With my co-authors, André Brotto and Fernando Martín, we extend the Eaton and Kortum model to integrate subsidies into the model’s trade cost parameter and test it using data from the Global Trade Alert and bilateral trade flows. Our results show that subsidies are successful in reducing imports only under certain conditions, and their impact varies widely across industries.
What could be the policy implications of your thesis?
Each chapter of my thesis could provide relevant insights for understanding the implications of different trade policies. The results of my first chapter show that not all shocks are necessarily negative for trade and that quick, well-targeted support can help firms pivot exports and imports rather than just cushion losses. The findings of the second chapter highlight that investing in digital infrastructure should not focus exclusively on improving connectivity, as it also has the potential to create jobs and boost local trade activity. Lastly, the third chapter suggests that subsidies are not always successful in protecting domestic industries and can distort trade in unintended ways. The design of industrial policy should therefore focus on long-term competitiveness — such as through technological innovation or a green transition — rather than short-term trade protection.
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Carolina Lemos Rêgo defended summa cum laude her PhD thesis in International Economics, titled “Essays in International Trade”, on 26 August 2025. Assistant Professor Yuan Zi presided over the committee, which included Associate Professor Julia Cajal Grossi, Thesis Supervisor, and Professor Simon Evenett, Department of Economics, University of St. Gallen, Switzerland.
Citation of the PhD thesis:
Lemos Rêgo, Carolina. “Essays on International Trade.” PhD thesis, Graduate Institute of International and Development Studies, Geneva, 2025.
Access:
Members of the Geneva Graduate Institute can access the thesis via this page of the repository. Others can contact Dr Lemos Rêgo.
Banner image by Tasnim911/Shutterstock.
Interview by Nathalie Tanner, Research Office.