The globalization myth: Why regions matter. By Shannon K.O’Neil, New Haven & London: Yale University Press. 2022. pp. 230. $30 (cloth)

The global trade system is under assault. The World Trade Organization is no longer a venue for trade negotiations, for these have been happening regionally. As the United States' economic policy seems to have been headed in the wrong direction, O’Neil begins by abandoning the established wisdom that globalization was so widespread. The central thesis of the book is that the world has actually not been globalizing. Instead, economic data appears to confirm that the world has fallen in love with regionalism in the last four decades or so, making claims of inevitable globalization become nothing but a “myth.” An emphatic revelation is this: only around two dozen economies actually saw their trade transformed in the last 40 years, whereas over 80 others had their economy standing stagnant or, to some extent, even falling into decline. And even those who embarked on the globalization journey with some success traded more often than not with their neighbors. In other words, the narrative in support of a prevalent and unstoppable globalization and the reality do not match. Instead, globalization is getting more and more regional down the supply chains across the borders. The failure to make the most of the economic partners close to home would be self-damaging. Such has been the experience of the United States. But before devising corrective remedies to the problems of the United States (US), the book vividly explains how the world economy came to be divided into three big blocs, namely, the European Union (EU), Asia, and North America. Other parts of the globe—Latin America, Africa, and the Middle East—for instance, have largely been left in the margins by mainly being the providers of raw materials and importers of finished goods. They have not truly participated in the international supply chain process as much. One early contribution of the book is its explanation of the rise of regional supply chains, which should already excite more research in the field of international commerce. Pieces and parts—which economists call intermediate goods—write the rules of the game. Plenty of real cases illuminate the pages. The fact that Nike does not even own one of the over five hundred factories that produce its signature swoosh suffices to prove the critical significance of choosing and relying on manufacturing partners. Gone are the days when a firm would own most operations in the supply chain, for the available economic data shows that well over half of the world's trade volumes are associated with intermediate goods in one way or another. With the exception of a handful of firms that have gone global, one must note the stark reality that around half of the international sales in the world actually happen within three thousand miles, meaning that firms have, in general, gone regional at best and not global. The targeted consumers might be at the other end of the globe, but the actual making of things is much more regional. “Countries that have become part of a regional bloc now have a distinct advantage over those that remain outside” (p. 36). Such distinct advantage is most pronounced in the case of the EU, on which there is a large body of literature. The intertwined linkages within this bloc have meant that its citizens are able to boast of certain shared aspects in political, economic and social affairs. They all are democracies, collectively hold one passport, use one currency, access one single market and recognize each other's academic degrees. The EU's success in creating such a deep regional integration was, from the very start, driven by the efforts of their diplomats rather than business people. This point must be emphasized because diplomats (or politicians by extension), still fresh from memories of two devastating world wars, would be naturally preoccupied with safeguarding security for the community. Increased confidence in the European community quickly gave birth to rapid commercial ties via numerous treaties that effectively and gradually tore down tariffs and regulatory barriers. Currently, over two-thirds of trade activities remain within the Union: they produce, sell to and buy from each other. “Europe has won the integration game…” (p. 68). The process of regionalization in Asia was quite different in that business people led it. When the Japanese economy was enjoying its very rapid growth in the 1960s, Japan was soon running out of skilled labor force. Business leaders looked to Taiwan, South Korea, Hong Kong and even Singapore for human resources. It was not until the 1990s, when integration had already been embedded in trade relationships, that the Japanese government began to get involved in the process by providing more and more development assistance to Japan's neighbors and many countries in Asia and, along the way, signed numerous free trade agreements that helped bind Asia altogether. China, being the most talked-about game changer, did not become rich on its own. By the 1980s, when Taiwan and South Korea were becoming high-growth performers, they, together with Japan, hooked China up in their supply chains so much that China's rise had everything to do with an increasing regionalization in Asia than with anything else. Although several notable western corporations are present in China, the biggest chunk of foreign direct investments was by far coming from Asian countries. What is strikingly remarkable is that in spite of unresolved internal geopolitical issues, more than half of Asia's international commerce still happens within the region. With the ratification of recent trade agreements such as the Regional Comprehensive Economic Partnership that binds all the Association of Southeast Asian Nations member states with China, Japan and South Korea (Australia and New Zealand are also members), the Asia region is poised to remain knitted together and strong. At the other end of the world, with the economic powerhouse US in the lead, North America should have been prosperous as a regional economic hub. True, Mexico did profit from the North American Free Trade Association (NAFTA), effective in 1994. Still, this happy day was short-lived when China came and shocked the world upon becoming a member of the World Trade Organization in 2001 and became a direct competitor with Mexico as a final assembler. Very quickly, China's sales to the US surpassed Mexico's. Canada also suffered when China ousted it as the largest supplier of goods to the US. O’Neil, however, faults NAFTA itself for not having sufficiently regionalized its three members, unlike the EU and Asia. Differences in the regulatory frameworks never really got fixed by the US, Canada and Mexico. Petty regulations, crumbling infrastructure, and label differences, to cite just a few, made trade within North America harder than it should have been. Once NAFTA was signed, companies were essentially left on their own, figuring out how to make the best out of the treaty because NAFTA had neither headquarters nor staff. In the end, NAFTA benefited more Mexico and Canada than it did the US and, with “China Shock,” NAFTA's bad fate became rather sealed. China effectively crumbled the supply chain in North America. With the populist America First policy in the White House, NAFTA became the United States-Mexico-Canada Agreement, which did very little to improve the already shaky regionalization. Quite the contrary, “the new agreement threatens to put out NAFTA's regional spark” (p. 123). While this is a book that sets out to label globalization as a myth, the author's core preoccupation is with trying to find remedies for the US, whose skepticism about the world and even about its closest neighbors is no longer an affordable strategy. As regional ties deepen everywhere else, the US's rather isolationist approach will make it more vulnerable as the overall economic forces are shifting in favor of Asia. In order to make North America economically stronger, the US must embrace its two neighbors in every way imaginable, shifting Washington toward a “Buy North American” mindset. Although broadly falling under the umbrella of development economics, the book reminds executive decision-makers in Washington that the US economy does not sit on an isolated land. It exists alongside geopolitics in which the most reliable friends are nearby neighbors. By repeatedly mentioning what had made both EU and Asia the most successful regional integrations, O’Neil, while longing for the widely shared economic prosperity of the 1950s and 1960s, unequivocally stresses the vital importance of doing things as a group. This book gives credible evidence that the world is simply ungovernable from a globalist trade perspective. Its main theoretical weakness, though, is that O’Neil never attempts to conceptualize globalization understandably in the first place. Her argument against globalization would have been stronger if she had conceptualized it first before showing all the data on the ground that fittingly points to regionalization. Notwithstanding this, written in prose easily accessible to the general public, this book should appeal to policymakers, practitioners and students of international commerce.

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