Regionalization, Not Globalization, Is The Economic Story of Our Time, Writes Shannon O’Neil in New Book

Regionalization, Not Globalization, Is The Economic Story of Our Time, Writes Shannon O’Neil in New Book

October 18, 2022 11:34 am (EST)

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Globalization “isn’t the only, or even the real, story of international economics over the past four decades,” writes Shannon K. O’Neil in her latest book The Globalization Myth: Why Regions Matter. “Yes, the world has internationalized,” she asserts. “But it hasn’t really globalized. It has regionalized.” 

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O’Neil, vice president and senior fellow at the Council on Foreign Relations, notes that “the story of economic globalization has been told and retold in books, speeches, articles, and news clips. Yet this conventional narrative largely misses the geographic limits of the majority of international commerce. When companies, workers, money, patents, goods, and services head abroad, they don’t go just anywhere. More often than not, they stick close to home. What’s happening to the global economy is better termed ‘regionalization’ than ‘globalization.’” 

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This regionalization, not globalization, argues O’Neil, “is the economic story of our time.” The author explains that “even in the wake of technological, geopolitical, and demographic shifts, geography still counts for a lot. Embracing and deepening regional ties is a way to succeed in an internationally connected and competitive world.” 

According to O’Neil, regionalization “helps explain who has gotten ahead and who has been left behind.” Not all regions are created equal—“those who engaged with their neighbors gained a competitive edge.” Over the past forty years, three big regional hubs—Asia, North America, and Europe—have emerged, thanks in part to regional investments and trade pacts. 

Limited regionalization, O’Neil asserts, also “helps explain some of globalization’s losers. In Latin America, Africa, India and South Asia, and the Middle East, less than a fifth of trade takes place within each region. Not coincidentally, these countries have grown more slowly than many of their emerging-market peers have.” 

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“As competition internationalizes and, crucially, regionalizes, so too must the United States.” Given the importance of regionalization for economic growth, O’Neil urges the United States—which “remains one of the more closed economies in the world.... [and] continues to be less integrated with its neighbors than its European or Asia commercial rivals”—to “expand and deepen the North American integration that NAFTA once spurred.” 

This “means turning to our neighbors, to gain the benefits that come from combining different skills, resources, and know-how and also from creating bigger markets and better export platforms for each other and the world.” Building cross-border infrastructure and investing in and promoting a continental workforce will allow the United States, Mexico, and Canada to exploit “the variations in capital, labor, and natural resources, in sources of information and clusters of innovation.... [and] to make products faster, cheaper, and better than they could in one nation alone. Integrating North America creates a larger home market and lets U.S. suppliers benefit from Canada’s and Mexico’s more expansive free-trade agreements with the world.” 

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O’Neil concludes with a warning: “The United States can handle competition. But it will be easier and done better with partners. If it continues to leave the benefits of regionalization to the rest of the world, more Americans will get left behind.”  

 

Read more about The Globalization Myth: Why Regions Matter and order your copy at https://www.cfr.org/book/globalization-myth.  

To interview the author, please contact CFR Communications at 212.434.9888 or [email protected]

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