It’s localization, not globalization, for the health of the US economy
In 2023, the U.S. experienced a trade deficit of $773 billion, with China as its largest trade creditor. The U.S. trade deficit has steadily grown since 2009, regardless of which party held the presidency. Yet this data obscures a new reality: The U.S. is undergoing a transformative shift away from the full embrace of globalization, toward a more deliberate focus on localization.
Localization is defined as an economic approach aiming to produce goods and services closer to home, preferably in one's own country. This shift is evident in the economic priorities of both Kamala Harris and Donald Trump through tariffs or industrial strategy. Despite the contrasting methods by both candidates, localization has become a bipartisan approach to economic nationalism. This shift is beneficial for the U.S. and its economy for three reasons.
First, this evolution stems from a growing recognition of the vulnerabilities exposed by global interconnectedness, particularly during crises such as the COVID-19 pandemic, the Russian-Ukrainian war and the ongoing Middle East conflicts. Disruptions in international supply chains have revealed the risks of overreliance on distant manufacturing centers and emphasized the need to secure domestic production capabilities. These supply shocks have increased national interest in strengthening local industries, revitalizing manufacturing and improving infrastructure to support a more resilient U.S. economy.
For example, initiatives under President Biden's administration, such as the Inflation Reduction Act, prioritize investments in critical infrastructure, clean energy and smart manufacturing. These initiatives create jobs and reduce dependence on foreign goods. The Inflation Reduction Act specifically focused on reshoring essential industries like semiconductors and incentivizes businesses to invest in domestic production.
A key provision of the Inflation Reduction Act included tax incentives and grants, which encourage companies to boost their domestic production capabilities, promote job creation and increase wages. Additionally, the Inflation Reduction Act addressed supply chain vulnerabilities by improving logistical infrastructure within the U.S. to increase efficiency and reliability by connecting local and regional suppliers.
Second, the shift toward localization reflects broader concerns about income inequality and the equitable distribution of economic benefits. Income inequality in the U.S. has been on the rise for decades, with the Gini coefficient, a common measure of inequality, increasing from 0.43 in 1990 to approximately 0.48 in recent years. This growing disparity is partly attributed to globalization, which has led to the outsourcing of jobs and the stagnation of wages in several key sectors, particularly manufacturing. By enhancing domestic production capabilities and supporting small businesses, localization fosters more inclusive growth, benefiting communities across the country.
According to the U.S. Small Business Administration, small businesses account for 44 percent of U.S. economic activity and employ nearly half of the U.S. workforce. Policies aimed at supporting these enterprises, especially in rural and underserved communities, can help reduce regional disparities in economic development. A 2021 study by Deloitte found that investment in advanced manufacturing technologies could create up to 2.1 million jobs by 2030. Moreover, many of these jobs require high-skill labor and tend to pay above-average wages, helping to address wage stagnation in sectors that have historically been affected by offshoring and global competition.
Third, localization positions the U.S. economy as a leader in innovation and sustainable development. The U.S. Department of Energy estimates that the clean energy sector could generate more than double the rate of overall employment as the country transitions to renewable energy sources. Initiatives such as the IRA, which prioritizes investments in clean energy and domestic production, aim to reduce carbon emissions while creating high-quality jobs in green industries such as solar energy, electric vehicles and battery manufacturing.
For example, research by BlueGreen Alliance suggests that the clean energy sector and the IRA will create over 9 million jobs over the next decade. Furthermore, localization efforts in the semiconductor industry, supported by the CHIPS and Science Act, are expected to reduce reliance on foreign technologies and inputs while creating thousands of well-paying jobs in high-tech fields. This will solidify the U.S. as a global leader in the green transition through innovation and sustainable growth.
The shift from globalization to localization addresses supply-chain vulnerabilities and economic inequality by fostering more inclusive and equitable growth. It also strengthens the foundation for the U.S. to lead in key sectors, such as advanced manufacturing and clean energy.
The presidential election offers two different paths for getting there, but it is clear the destination is the same for both candidates. By investing in local industries and technology, the U.S. can create a more resilient, innovative and sustainable economy that benefits a broader spectrum of society.
Christine Ngoc Ngo is an associate professor of economics at Bucknell University. She is the author of “Rent Seeking and Development: The Political Economy of Industrialization in Vietnam.” Her recent research focuses on the impacts of COVID-19 on rural America.
Date: |
Topics
-
Top stories - The New York Times
AI, Aging and Shifts Globalization Will Shock the American Economy
The combination of an aging work force, artificial intelligence and shifts in globalization will challenge America in ways not seen in decades.9 hours ago -
Business - MarketWatch
Lower oil prices are good for consumers — but a bad sign for the global economy
A significant drop in oil prices may offer consumers reason to celebrate, but it also hints at an economic slowdown in China, the world’s second largest economy.Yesterday -
Politics - The Hill
The end of US global dominance presents an opportunity for America
Clinging to hegemony leads only to more costly interventions and strategic failures, as evidenced by recent decades of U.S. foreign policy.2 days ago -
Business - Inc.
Here’s What Consumer Power Will Tell Us About the Economy
Corporate earnings reports and retail sales data could offer evidence that the U.S. economy is resilient as inflation ebbs.3 days ago -
Business - The New York Times
Retail Sales Surpass Expectations, Sign of Solid US Economy
A new report showing a rise in retail sales in September indicates that consumer spending, a key engine of economic growth, remains robust.5 hours ago -
World - Financial Times
UK should use private capital to rebuild NHS, say health leaders
Report by NHS Confederation concludes that ministers are likely to need several options to raise capital18 hours ago - United Kingdom -
Business - Financial Times
The Budget Game: Can you do better than Rachel Reeves?
Step into the chancellor’s shoes and devise your fiscal plan2 days ago -
World - Financial Times
Can you run the UK economy?
Step into the chancellor’s shoes and devise your Budget plan2 days ago - United Kingdom -
Business - The Wall Street Journal
Health Care Roundup: Market Talk
Find insights on UnitedHealth Group, Walgreens Boots Alliance, Zealand Pharma’s Petrelintide, and more in the latest Market Talks covering the Health Care sector.2 days ago
More from The Hill
-
Politics - The Hill
Yellen slams tariffs as Trump makes case
Welcome to The Hill's Business & Economy newsletter {beacon} Business & Economy Business & Economy The Big Story Yellen takes shot at tariffs as Trump digs in Treasury Secretary Janet Yellen ...13 minutes ago - Donald Trump -
Politics - The Hill
Why Harris is happy with that confrontational Fox interview
Vice President Harris and Fox News host Bret Baier battled Wednesday evening in a 30-minute encounter that looked more like a debate at times than an interview. Baier asked Harris some of the ...30 minutes ago -
Politics - The Hill
Watch live: Walz gives remarks from North Carolina
Minnesota Gov. Tim Walz (D), Vice President Harris's running mate, is in North Carolina as the state kicks off early voting Thursday. Early voting began as the western part of the state is still ...31 minutes ago -
Politics - The Hill
Evening Report — Voting ramps up in southeastern battlegrounds
{beacon} Evening Report © AP Photo/Charles Rex Arbogast Voting ramps up in southeast battlegrounds Voting is underway in Georgia and North Carolina, two pivotal southeastern battlegrounds that ...40 minutes ago -
Politics - The Hill
AI and the nuclear renaissance
Welcome to The Hill's Technology newsletter {beacon} Technology Technology The Big Story Big Tech taps nuclear power as AI energy demand grows Major technology companies are increasingly turning ...42 minutes ago - Artificial Intelligence