from Greenberg Center for Geoeconomic Studies and Latin America Studies Program

The Globalization Myth

Why Regions Matter

Shannon K. O’Neil offers a powerful case for why regionalization, not globalization, has been the biggest economic trend of the last forty years.

Book
Foreign policy analyses written by CFR fellows and published by the trade presses, academic presses, or the Council on Foreign Relations Press.

Globalization is not the only—or even the real—story of the global economy over the past four decades. In The Globalization Myth: Why Regions Matter, Shannon K. O’Neil shows that the conventional wisdom about globalization is wrong. The world has become more international but not nearly as global as the narrative of economic globalization suggests. As companies, money, ideas, and people went abroad over the last forty years, more often than not they moved and traded regionally rather than globally. They did not go just anywhere; they stayed close to home.

This overlooked reality of regionalization has implications for U.S. policy. Regionalization has enhanced economic competitiveness and prosperity in Asia and Europe. It could do the same for the United States, if only it would embrace its neighbors.

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Americas

Globalization

Trade

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Supply Chains

Charting the rise of three major regional supply chain hubs in Asia, Europe, and North America, O’Neil demonstrates how the countries that traded with countries nearer by gained a competitive edge. Regional production chains make products more competitively as they can draw on different skill sets, labor costs, raw materials, financing, and market access. Through lower prices due to economies of scale and higher quality through specialization, regionally made goods become more globally competitive and more likely to edge out similar products made in just one country that tries to go it alone. And this not only boosts sales; by keeping production near at hand in the region, it supports more jobs at home as these factories and assemblers draw on nearer by suppliers. By contrast, for nations without strong commercial ties to their neighbors, workers and consumers are largely left on the ends of global supply chains, relegated to sending out raw materials and bringing in final goods. Unlike in regional hubs, these goods from distant shores compete with, rather than support, local manufacturers, leaving these nations in the economic slow lane.

Despite the rise of a North American manufacturing platform—through the 1993 North American Free Trade Agreement (NAFTA), revised in 2020 as the U.S.-Mexico-Canada Agreement (USMCA)—the United States continues to be less integrated with its neighbors than its Asian or European commercial rivals, as more of its trade still goes to countries outside its region than within it. And while trade benefits the United States as a whole, regional ties in particular help U.S. workers and businesses more than global ones do.

O’Neil shows that while many of the technological, demographic, climate, and policy shifts happening today favor the United States and its economy, regionalization of production and supply chains will still provide commercial advantages. To keep up with and compete against Asia’s expansive reach and Europe’s industrial prowess, U.S. politicians, entrepreneurs, and workers need to recognize that the United States requires deeper integration with its neighbors. Regionalization begets variety, fosters innovation, enhances resilience, and creates a much stronger home base. International trade deals and other policies that recognize this reality would allow the United States to preserve and expand its domain in the global marketplace.

The Globalization Myth provides a path forward for the United States and other countries looking to get ahead in the global economy. The answer is not isolation, nor is it unfettered globalization. Rather, embracing and deepening regional ties is a way to succeed in an internationally connected and competitive world.

Educators: Access Teaching Notes for The Globalization Myth.

More on:

Americas

Globalization

Trade

Economics

Supply Chains

Reviews and Endorsements

Regionalization is quickly becoming the new globalization. Shannon O’Neil’s The Globalization Myth deftly explains why the key to America’s continued industrial competitiveness lies neither in ‘America alone’ reshoring nor in laissez faire offshoring but in nearshoring. An important corrective to a broken public policy debate.

Ian Bremmer, President, Eurasia Group

Shannon O’Neil’s call for ‘more NAFTAs and fewer America Firsts’ is timely, constructive, and pragmatic. With her deep knowledge of the Americas and of the politics of regional integration, she makes a practical case for an American economic strategy which would work in a world dividing more into blocks. I urge our elected officials to open their minds to O’Neil’s compelling argument.

Adam S. Posen, President, Peterson Institute for International Economics

This is a phenomenal book about regionalization. Global markets are consolidating into three regional hubs. The United States needs to act on that, or it will get left behind. I found this a gripping read!

Ann E. Harrison, University of California, Berkeley

It is regionalisation, not globalisation, that explains the mechanics of prosperity. . . . If hope truly does lie in thought, we need to take our thinking about the world a lot more seriously than we do today. 

Richard Horton, The Lancet  

The benefits of globalization have been uneven, and many who have suffered the loss of their jobs or the hollowing out of their communities are justifiably angry. According to O’Neil, these costs are much smaller when trade occurs at a more regional scale.

Raghuram G. Rajan, Former Chief Economist, International Monetary Fund

Over the past forty years as companies, money, ideas, and people went abroad, more often than not, they looked regional rather than globally. This is the core message in Shannon’s terrific book that looks at a consequential topic: the path to stronger and more inclusive growth isn’t less globalization, it’s more regionalization.

Elmira Bayrasli, CEO and Cofounder, Foreign Policy Interrupted

With strong arguments and data, O’Neil unmasks the myth behind the narrative of the free flow of trade and knowledge across the globe and explains that what has occurred is in fact the consolidation of regional trade and regional supply chains across three blocks: Asia, Europe and North America.

Carlos Alvarado Quesada, Former President, Republic of Costa Rica

O’Neil’s proposed policy solutions are eminently reasonable: further reduction of trade barriers, stronger border and port infrastructure, bi- and tri-lateral cooperation on regulatory policy.

Brian Palmer-Rubin, ReVista: Harvard Review of Latin America

In the News

Espaldarazo a México del ‘Rey Carlos III’ de Wall Street

Forbes México

México tiene mayores oportunidades para el nearshoring que China

Cobertura 360

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El Universal

US Solar Boom Opens $2 Billion Indian Door to Banned Products From China

Bloomberg

Outside voices: Institutionalizing APEP as a ‘start’ toward tapping Latin America’s potential

Inside U.S. Trade

Detectan bancos aumento en demanda de crédito por nearshoring

La Jornada

Biden to Host Inaugural Americas Economic Summit

Voice of America

Dollarization Beyond Argentina

Cato Institute

How nearshoring powers globalisation

Business Standard

Infraestructura, política industrial y profesionalización, claves para aprovechar nearshoring

El Economista

Resta fuerza al País la falta de ProMéxico

Reforma

Pega inseguridad a relocalización de empresas en México

Reforma

Soluciones prácticas a la integración energética

El Sol de México

Robotics offers route for US manufacturing renaissance

Financial Times

Protecting the integrity of WHO's regional offices

The Lancet

China Derisking Is Inevitable. To Minimize the Pain, Supply Chains Need a Revolution.

Barron's

Nearshoring In The Americas: Hype And Reality

AQ Podcast

Globalization Journey: Is Latin America Still Lagging Behind?

The Geopolitical Puzzle

Globalización, desglobalización y ‘nearshoring’

El Financiero

Mexico replaced China as America's top trade buddy—and it shows how the global economy is rapidly transforming

Business Insider

Latin America is Beating the World at Wasting Opportunities

Financial Times

The Globalization Myth with Shannon O’Neil

The Progress Network

In Brief: What’s Going On in Mexico?

CAFE

Shannon K. O’Neil – The Globalization Myth: Why Regions Matter

Smead Capital Management

On the Ground at CERAWeek: Where the Energy World Stands on the Low-Carbon Transition

S&P Global

Globalization 2.0: Regionalization, Resilience, Security and Sustainability

Teneo

Debunking Globalization: How Regionalization Shapes the Global Economy

Chicago Council on Global Affairs

The Globalization Myth: Why Regions Matter with Shannon O’Neil

Center for Strategic & International Studies

The Future of Global Trade

The New Books Network

Globalisation and its Future

AIG

Shannon K. O'Neil: The Globalization Myth - Why Regions Matter

The Realignment

Is the Age of Globalization Over?

Moody's

Shannon O’Neil on What Everyone Gets Wrong About (De)Globalisation

Macro Hive Conversations

The Hale Report Podcast Episode 39

EconVue

Is Globalization a Myth?

Marketplace

Fareed Zakaria GPS: Is Globalization Dead?

CNN

‘The Globalization Myth’ By Shannon K. O’Neil

NPR Boise State Public Radio

Why Do Regions Matter?

Toronto Global

A Review of The Globalization Myth: Why Regions Matter

ReVista: Harvard Review of Latin America

Off the Shelf: Recent Books with Harvard Connections

Harvard Magazine

Bán bà con xa, mua láng giềng gần

Saigon Nhỏ

Por Qué los Espacios Regionales Cobran Cada Vez Más Protagonismo en el Comercio Global

La Nación

Middle Powers are Reshaping Geopolitics

Financial Times

HK’s Role in Nation’s International Economic and Trade Strategy

China Daily

U.S., Mexico, and Canada Must Embrace Each Other to Compete with China, Author Says

Dallas Morning News

Shannon O’Neil on the Globalization Myth

The Wire China

Asia y Europa: Contrastes y Percepciones

El Universal

Why America Needs More of a “Swing State” Focus in its Foreign Policy

The Liberal Patriot

Reliable and efficient clean energy supply is key to North American integration

Brookings Institution

Unlocking Globalization’s Goldilocks Formula

Bloomberg Opinion

Nearshoring y el Mito de la Globalización: ¿Por Qué los Estados Unidos Necesitan a México?

Arena Pública

Offline: America—a codicil

The Lancet

Offline: Rethinking the World

The Lancet

The Law of Comparative Advantage

Advisor Analyst

The U.S. and Mexico: An Odd Couple for 200 Years

Este País

From Chaos to Opportunity: Could Biden’s Mexico and Border Visit Change the Narrative?

Dallas Morning News

‘OK, Mexico, Save Me’: After China, This Is Where Globalization May Lead

New York Times

¿Sería fútil relanzar la Unasur?

Clarín

The Urgent Need for a Western Hemisphere Alliance

The Hill

Forget globalization, “regionalization” is the next big thing for Canada, USA

Energi Talks

Shannon O'Neil on The Globalization Myth: Why Most Economics Is Regional

Keen On

El mito de la globalización

Broojula

US Export Controls on China, More Inflation & Thinking Regionally When Talking Globalization

Trade Splaining

The Globalization Myth: A Conversation With Shannon O'Neil

Deep State Radio Network

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Americas Society/Council of the Americas

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North Capital Forum

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