Power’s Strategic and International Studies Blog

Overview of Rugman’s Argument
 

Globalization is a Myth- Selected extracts from The End of Globaization by Alan Rugman(Rugman 2001)

Alan Rugman states that globalization is a myth.  He states that the majority of trade is regional within each of the “triadâ€? regions of Europe, North America and Asia.  At the time of his book in 2001, intra-regional exports were 62% for the EU; 56% for NAFTA and 56% for Asia.   At a firm level, across the globe’s 500 largest companies, 72% of all sales where within their home region.Â
 

 

Rugman states that “of the 380 companies for which data are available, only eight are ‘global’ in the sense of having at least 20% of their sales in each region of the triad. There are mainly multinationals in electronics such as IBM, Sony, Philips, Nokia, Intel, Canon and Flextronics. The others are: Coca-Cola and LVMH. There are also a score of ‘bi-regional’ multinational organizations with at least 20% of sales in two of these regions of the triad. These include: Toyota; Nissan; DaimlerChrysler; Honda; AstraZeneca; GlaxoSmithKline; Ericsson; Diageo; Michelin; etc.� However, the facts are supporting this regionalization.
 

Political positioning and alliances are also being affected by this.  The attacks of 9/11 have reflected the political alignments of the globe based on the triad reality of regionalization. Additionally, the extension of NAFTA to lock in all 34 countries of the Americas supports the regionalization construct (CAFTA). See Chapter 6.   Therefore, it is argued that the true economic global picture is one of increasing regionalization and decreasing globalization. We need to examine, analyze, and discuss regional strategies and issues as much as globalization strategies and issues based on this trend.  Governments are creating an illusion of free trade, supporting trade when it benefits their owning class and practicing protectionism when a country tries to saturate their domestic economy. Economic threats, covert military support of economic self interests, regionalism, political alignment; it is no wonder that the efficacy of the free market, international trade, and globalization is being challenged.  Trade is regionalized, protectionism is practiced, and globalization is a myth.  Then again, it is not what you know, or think you know, but how you have come to know it.

This entry was posted on Tuesday, April 24th, 2007 at 2:29 pm and is filed under Globalization is a Myth- Selected extracts from The End. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.