The Globalization Myth: Why Regions Matter

Speaker: Shannon K. O’Neill (Council on Foreign Relations)

Date: 16 April 2024

Speaker Session Summary

Dr. O’Neil offers a reframed perspective on economic globalization, highlighting the prominence of increased interregional trade rather than international trade. She comments that, with a few notable exceptions like Boeing, the movement of goods and products has predominantly remained regional rather than truly international over the past four decades. This regional movement of goods is particularly evident in Europe and Asia and has bolstered regional supply chains, fostering the retention of jobs and capital within countries. Illustratively, when the US trades for a finished good from Mexico, it is probable that nearly half of the product originated in the US. In contrast, if a similar part is imported from China, then it is unlikely that more than 4% of the part originated in the US. Additionally, economic regionalization has enabled economies to specialize, allowing them to excel in producing certain products over others. 

Geopolitics and industrial policy are two of the primary drivers behind the rapid regionalization of the global economy. Geopolitical tensions increasingly impact supply chains as they traverse national borders, exemplified by the strained relations between China and Japan leading to a decrease in trade between the two countries. Industrial policies, often rooted in protectionism and prioritizing domestic markets, also play a significant role. Dr. O’Neil emphasizes that the US maintains a strategic advantage as supply chains continue to become more fluid. She underscores these advantages, such as the robust US educational system, favorable demographic profile, and ability to economically entice countries away from adversaries.  

To read more of Dr. O’Neil’s analysis of globalization and regionalization, please read “The Globalization Myth: Why Regions Matter.” 

Speaker Session Recording

Briefing Materials

Biography: Shannon K. O’Neil is the Vice President of Studies and Nelson and David Rockefeller senior fellow for Latin America Studies at the Council on Foreign Relations. She is an expert on global trade, supply chains, democracy, Mexico, and the Americas, and has taught at Harvard and Columbia Universities. O’Neil has lived and worked in Mexico and Argentina, where her career began in emerging markets finance before turning to policy. She is a columnist for Bloomberg Opinion and an author of two books: Two Nations Indivisible: Mexico, the United States, and the Road Ahead, on U.S. relations with Mexico, and her latest, The Globalization Myth: Why Regions Matter.