Lecture Notes: Council on Foreign Relations Event

Introduction

• Speaker: Richard Haass
• Occasion: Celebrating Shannon O'Neill's new book, "The Globalization Myth, Why Regions Matter."
• Shannon O'Neill
  • Vice President at the Council on Foreign Relations
  • Deputy Director of Studies
  • Expert on Latin America and Mexico
  • Educational background from Yale and Harvard

Discussion on Globalization

Definition and Myth

• Globalization

  • Viewed from an economic perspective
  • Involves trade data, money flows, foreign investment, movement of ideas, patents, etc.

• Myth of Globalization

  • Common belief: Globalization is unstoppable and has transformed economies worldwide.
  • Reality: Only about two dozen countries have truly transformed due to globalization.
  • Approximately 90 countries have seen stagnation or decline in globalization effects.

Economic Performance

• Countries that internationalized mainly traded regionally, not globally.
• Successful regions: Asia, Europe, and North America.
• Underperforming regions: Middle East, Africa, and South Asia.

Supply Chains

• Key feature of recent globalization is the creation of international supply chains.
• Trade consists mostly of intermediate goods (75%).
• Regionalization in manufacturing due to supply chains.

Effects of Regionalization

Political and Economic Implications

• Biden Administration's National Security Strategy

  • Lack of focus on regionalization in economic policies.
  • Example: Trans-Pacific Partnership could enhance regional ties.

• NAFTA Criticism

  • Misplaced criticism based on misunderstanding of globalization's impact.
  • Historical competition from international counterparts not due to globalization.

Examples of Regional Success and Challenges

• China

  • Success attributed to regional integration with neighboring Asian countries.

• Brexit

  • Criticized as a poor decision economically and competitively.

• Mexico

  • Current trajectory under nationalist policies seen as suboptimal for regional growth.

Government Policies and Industrial Focus

Industrial Policy vs. Regional Policy

• Biden Administration's focus on reshoring

  • Industrial policy focused on national production security.
  • Challenges in implementing a purely national industrial approach.

• Need for Regional Integration

  • Importance of integrating supply chains within North America.
  • Chip production as an example, needing regional supply chain security.

Global Issues and Regional Governance

Potential for Regional Solutions

• Global challenges like trade, climate, and health could benefit from regional cooperation.
• Existing international bodies like WTO less effective; regional agreements offer potential.

Regionalization as a Model

• Regions could serve as models for governance and policy solutions.
• Demonstration effects of successful regional policies can be emulated.

Conclusion

Future Recommendations

• Importance of protecting and expanding regional trade agreements like USMCA.
• Potential for North American collaboration in infrastructure, climate, and technology.
• Need for sustainable regional policies to address global challenges.

Closing Remarks

• Shannon O'Neill's Contribution
  • Her book provides an important perspective on regionalization's role in global economics.
  • Encouraged the audience to consider regional solutions alongside global approaches.