Does Globalization Cause Growth?

Economic theory predicts a positive effect of trade on per capita income. Empirically, it is hard to estimate the causal effect of trade on income. This is so because more trade leads to higher incomes while at the same time richer countries trade more. One approach to circumvent this problem is to predict trade by making use of the geographic variation across countries and the gravity model of trade. This thesis explores the robustness and validity of this approach and then uses the approach to disentangle the individual effects of trade, migration and Foreign Direct Investment on per capita income.