Thread by @shannonkoneil

Conventional wisdom about globalization is wrong. Instead over the last 40 years, the world has regionalized. My new book, out today, explains how this happened, where we’re headed and what this means for the 🇺🇸. amzn.to/3TyZIAe 🧵 (1/16)

Companies, money, and people have indeed gone abroad. But they haven’t gone just anywhere. More often than not, they stayed closer to 🏠. They went regional. (2/16)

The average internationally-sold product travels less than 3,000 miles–the distance from NY✈️CA–according to @DHLGlobal. ghemawat.com/wordpress/wp-c… (3/16)

And only a handful of companies live up to the “global” hype. A study of 365 prominent multinationals found that just 9 have truly conquered the world. Most have expanded mainly next door. bit.ly/3ejJV80 (4/16)

Why did that happen? When companies go abroad, they boost sales and profits. But go too far — go global — and profits margins fall. @McKinsey calls this “the globalization penalty.” mck.co/3Rtwktb (5/16)

In this international expansion, not all regions were created equal. Three major manufacturing and supply chain hubs rose above the rest: Europe, Asia, and, to a lesser extent, North America. Together, they churn out ~90% of the world’s goods. (6/16)

Over 2/3rds of Europe’s trade remains within the EU. Over half of Asia’s trade stays within the continent. North America lags behind: ~40% takes place between the US, Canada, and Mexico. Still, it outpaces the rest of the world (where only <15% of trade is regional). (7/16)

Regional concentration helps explain globalization’s 🏆 and losers: deeper regional integration boosted economic competitiveness, it gave many European and Asian nations an edge over the US (and over Latin America, Africa, South Asia, or the Middle East). (8/16)

The forces of globalization are again changing: 🤖, automation, and 3D printing mean many businesses can do more with fewer workers, making cheap labor relatively less important. (9/16)

Demographic shifts are raising costs in once low- wage nations, specifically in China, where more workers are now exiting the labor market than entering. fam.ag/3xdLxHj (10/16)

The value of time is growing, too. As consumers expect faster delivery, factories thousands of miles away can mean lost sales. Add COVID-19🦠, supply chain snafus and climate disasters, and far-flung production is relatively less profitable. (11/16)

Politics are changing, too: freer markets giving way to industrial policies and protections; national security concerns baked into trade agreements and influencing international commercial ties. (12/16)

Many of these shifts favor the US, as do its clear legal rules, world-class universities, and wealthy consumers. But regionalization will become more—not less—important. (13/16)

Greater commercial ties with Mexico and Canada create a bigger market for US made goods and tariff free access to more of the world as Mexico and Canada have free trade agreements with nearly 60% of global GDP each, while the US has preferred access to <10%. (14/16)

Exports are more competitive when countries make them together, taking advantage of differences in skills, workforces, resources, and industrial clusters to make goods better, faster, and cheaper. That means more demand and work stays on the continent—and thus in the US. (15/16)

If the US wants to remain an economic powerhouse—competing with Asia, Europe and others for global consumers, businesses and industries—it can’t go it alone. It needs its neighbors. You can read more from The Globalization Myth here: amzn.to/3TyZIAe 🧵 (16/16)