The article explores how opening borders to trade and capital movement affects different countries' economies. In a model with two countries, one with rigid wages and the other with full employment, trade leads to improved output and wages in the full employment country. However, unemployment rises in the country with wage rigidity. Globalization can lead to unstable economic cycles, even without external shocks, due to labor externalities. This means that trade can cause fluctuations in economic activity, employment, and trade balances.