Beyond the Flat World - Part 1: The Hidden Geography of Commerce: Why Globalization Is a Myth and Regionalism Is the Reality

The story of the global economy over the past four decades is one that has been told and retold in countless books, speeches, articles, and news clips. The pervasive narrative suggests that the world has become “flat,” a seamless, borderless marketplace where technology has erased the significance of distance, allowing companies, workers, and money to flow freely across continents in an era known as globalization.

This narrative, while seductive and frequently reiterated, misses the fundamental geographic reality of modern commerce: the world has indeed become more internationalized, but it has not truly globalized. Instead, the real economic story of our time is regionalization.

The distinction is not semantic; it is critical for understanding which communities and nations have prospered and which have been left behind. When companies, goods, and services cross borders, they overwhelmingly tend to stick close to home, concentrating international commerce into three massive regional economic hubs. Those nations that have actively engaged with their geographic neighbors have gained a powerful competitive edge, illustrating that isolation is not the path to prosperity.

The conventional narrative of globalization largely fails to account for the physical and cultural limits that still dictate where goods and money go. While the international movement of goods, services, people, ideas, and money has vastly improved living standards in dozens of countries, sped up innovation, and lowered consumer prices, the geographic limitations of this exchange are profound.

The Cautionary Tale of the Rubber Capital

To truly grasp the impact of global trade competition coupled with limited regional ties, one must look no further than Akron, Ohio. Akron built its reputation on tires, following Henry Ford into the car industry in the 1890s. During the two World Wars, Akron’s rubber companies, including Firestone and Goodyear, scaled up dramatically, churning out essential military supplies like tires, shoes, tubing, guns, blimps, and planes. By the mid-twentieth century, the five major tire companies located in “the Rubber Capital of the World” were responsible for producing nearly 60% of the world’s tires.

Prosperity flowed into the city. Goodyear founder F. A. Sieberling lived in a sprawling sixty-five-room Tudor manor, and the local elite’s social calendars were filled with events at the dozens of golf courses and country clubs that sprang up, including PGA-tournament level links built by Firestone as an employee perk. Even for the working class, life was improving; tire making was dangerous and messy, but it was also well paid. The city was a magnet for labor, drawing workers from hundreds of miles away; every Sunday night, Route 21 would fill with cars bearing West Virginia licenses, headed for early Monday shifts.

However, this industrial golden age ended abruptly. In 1982, the last tire was pulled off an Akron factory line by a General Tire worker named Richard Mayo, concluding almost a century of local industrial history. The smokestacks cooled, local bars and diners went dark, and over the course of the 1980s, four of the five largest tire companies were sold off to foreign rivals. Tens of thousands of jobs, and even more people, vanished, leaving Akron a defining symbol of late-century Rust Belt decay.

The simple explanation offered was that Akron was a victim of globalization, destroyed by outsourcing and offshoring. However, this explanation misses a crucial part of the story: Akron’s demise was less a failure of globalization and more a consequence of the costly consequences of the United States’ limited regionalization.

By the late 1970s, Akron’s international rivals were rapidly forming powerful regional blocs:

• Japanese tire and car production had expanded to span East Asia.
• French and German manufacturers had fully embraced Europe’s Economic Community.

With NAFTA negotiations still a decade away, American companies in Akron were left to “go it alone,” lacking strong regional partners to compete against the burgeoning, integrated manufacturing supply chains of Asia and Europe. This profound difference in scale and coordination gave rivals like Michelin and Bridgestone a decisive competitive advantage over their U.S. counterparts.

The Age of Internationalization: Why Distance Seemed Dead

To appreciate why regional ties became so vital, one must first recognize the dramatic international transformations that fueled the belief in “a flat world.” Since 1981, when annual trade totaled $2.4 trillion, the world has seen an explosive increase in commerce, now nearing $20 trillion. International capital flows also soared, jumping from $500 billion annually in the early 1980s to over $3.5 trillion today.

This unprecedented increase, termed internationalization, was made possible by revolutionary leaps in transportation, communication, and finance.

The Logistics Revolution

Before World War II, most cross-border trade involved finished goods like olives from Italy or cars from Germany. After the war, this changed as companies began slicing up manufacturing into discrete parts and processes, leading to the rise of supply chains (or “global value chains”) that linked countries together to create things collectively. Today, roughly 80% of trade involves raw materials or intermediate goods.

The physical movement of these components became drastically cheaper and faster.

1. Container Shipping: The invention and adoption of standardized steel shipping containers transformed global logistics, allowing “monster ships” to carry over twenty thousand containers on a single sea crossing. Shipping ports, like Singapore’s harbor, were quick to convert their berths and docks, enabling colossal cranes to load and unload mountainous stacks of colorful steel boxes along the waterfront.

2. Air Cargo: In the early 1970s, Fred Smith launched Federal Express (FedEx), speeding up U.S. deliveries via dedicated planes and making overnight delivery common. Simultaneously, DHL aimed to become the world’s courier, initially connecting West Coast companies to Hong Kong, Japan, and Australia, eventually becoming the world’s largest logistics company, shipping over four million seabound containers and flying cargo weighing as much as one million cars annually.

The Triumph of Proximity: Why Globalization Is a Misnomer

Despite these profound technological and financial enablers, the conventional narrative of seamless globalization remains fundamentally flawed. The vast majority of international commerce remains geographically constrained.

The idea that “the world is flat” contradicts the reality that moving things is still expensive. Even with enormous container ships and advanced logistics software, distance translates into both time and money. The data confirms this persistent gravity of distance:

• The average international sale should involve a journey of 5,300 miles (the distance between two randomly selected countries).
• Instead, half of what is sold internationally travels less than 3,000 miles—a distance comparable to a flight from New York to California, often insufficient to cross oceans.

Beyond mere transit costs, proximity offers advantages that Zoom, Skype, Slack, and digital tools cannot erase:

1. Soft Advantages: Short plane rides for face-to-face meetings remain critical for building trust and resolving complex issues. Proximity provides cultural cues, similar time zones, and shared languages, which significantly improve “teamwork.”

2. Clustering and Peer Pressure: Once initial companies set up shop nearby, suppliers and consultants follow, leading to industrial clustering that reinforces regional advantages.

3. Government Incentives: Governments actively deepen regional ties through incentives like free-trade agreements, cheap loans, and visa waivers.

The Three Great Regional Hubs

This pattern of clustering has led to the emergence of three dominant regional manufacturing hubs globally: Asia, Europe, and North America.

Collectively, these three hubs perform the vast majority of the world’s manufacturing:

• Asia is the largest, producing nearly half of all global goods.
• Europe and North America together supply another 40% of global products.
• The rest of the world (Latin America, Africa, the Middle East, etc.) divides the remaining 10%.

The concentration of wealth and opportunity in these hubs is striking. Of the thirteen countries that successfully moved into the high-income ranks since 1960, ten are now part of one of these global regional hubs. Conversely, regions like Latin America and Africa have seen the biggest losses in manufacturing output and jobs.