The Regional Structure of the Global Economy
Channel: Salvatore Babones
Date: 2016-08-19

The dominant globalization narrative of the last quarter century has overlooked the fact that the global economy has not so much globalized as regionalized.  Three world's major economic regions (North America, Western Europe, and East Asia) together account for as much as 80 percent of the global economy, with the North American region clearly dominant in terms of GDP per capita.  These regions are also mostly self-contained, with intraregional trade comprising a majority of total trade.  This contrasts sharply with the remainder of the world, in which most trade is external trade with the three major regions.  National development strategies should thus take regional positioning into account.  Middle-income countries that are well-integrated into the major economic zones might have the opportunity to develop through upgrading within existing production networks, but their peers that are isolated from the major economic zones cannot realistically pursue upgrading strategies.  Perverse elite incentives may in any case prevent countries from pursuing strategies that would lead to positive economic transitions.