‘Ally-shoring’ will help US rebuild economy and global leadership
Like a giant global pause button, the COVID-19 crisis has forced us to look hard at our world, our relationships with people and governments across continents. It has also made vivid the fragility of our health, political and economic systems.
While many of our political leaders now clamor for “on-shore” production of all essentials, a much better path, for both our economy and our foreign policy, is what we call “ally- shoring.” Ally-shoring describes a program of sourcing essential materials, goods and services with trusted friends, while disengaging from China and other states that seek to undermine American interests from critical supply chains.
Ally-shoring also provides an option to countries that would rather work with a Western-led trade and economic development regime. Ally-shoring can undergird the long-term economic success and stability of democracies across the globe.
On the home front, ally-shoring would bring good jobs, new economic opportunities and optimism to many of our own citizens, who even before the pandemic were feeling ignored and left behind by globalization and demographic and social change.
An aggressive ally-shoring offensive is especially needed in the older industrial communities and rural reaches of the Midwest and middle America. Though popular perceptions refreshed by the 2016 election may suggest otherwise, the Midwest is already much more than hollowed out factory towns and rural hinterlands. Communities from Des Moines and Minneapolis to Pittsburgh and Columbus have shed their industrial and agricultural skins and were thriving in the pre-pandemic tech- and talent-driven global economy.
But the region is also home to America’s largest number of former manufacturing and mill towns, many having lost economic anchor industries that remain adrift in a changed economy. These historic manufacturing communities (including those in our home state of Michigan) are among the hardest hit by COVID-19 job loss. If history is any guide, the effects of the recession are also likely to be longer-lasting and more profound in these same regions.
As we rewire our economy post-COVID-19, the industrial Midwest can once again become the center point of new ideas, technologies, business and good job growth in emerging sectors. A purposeful re-centering of production, distribution and business services networks (already highly intertwined) with nearby allies such as Canada, Mexico and South America, and re-forging strong linkages with long-standing allies in Western Europe, the Middle East, Africa and Asia, would serve to reinvigorate West-leaning economies. It would also serve to tap the particular competencies of Midwest and North American companies and producers in research, manufacturing and distribution, and the impressive innovation infrastructure of companies, colleges and universities.
The recent Council on the Great Lakes Region (CGLR) “Great Lakes, Great Minds” report notes that Midwestern states and two Canadian provinces next door host the world’s most powerful cluster of higher education institutions, key drivers of research and technology development.
Nineteen of the world’s top 100 universities, one-third of the top 100 engineering schools in the United States and Canada, and 15 percent of the world’s top 100 medical research schools are in this binational Great Lakes/Midwest region — which the Economist recently noted can move this region from “rustbelt to brainbelt.” When these institutions join with the region’s capabilities in product development, production and distribution – which includes 57 Global 500 companies and over eight million small and medium-sized businesses – it is a powerful platform for building new businesses, creating good-paying jobs and solving the big challenges of a post-pandemic economy.
This region already had significant relative strengths in key economic clusters, including advanced manufacturing, autos, food systems, financial and business services and information technologies. The innovation assets extant in the Midwest can now nurture additional businesses and good-paying jobs in additional fast-emerging, multi-trillion-dollar global business sectors, such as clean energy, smart water technology, new mobility systems and bio-science and medical products.
An ally-shoring strategy recognizes the interdependent nature of the global economy and trade and the reality of globalized information and supply chains. This is not to suggest that we will not have any economic engagement with China (we will, and we should in many arenas). But it leans into our relationships with those we trust. By centering our economic and trade relations with our friends, we can drive a more powerful collective recovery and facilitate larger scale economic activity across the American Heartland.
We need bipartisan commitment to ally-shoring as a matter of national economic security. Business leaders must heed the call to action, working with our elected leaders, helping us join across partisan divides. When we link arms again with our international friends and neighbors, it will do more than speed up recovery and nurture renewed economic prosperity at home. It will also help ameliorate domestic political division through a renewed sense of opportunity, inclusion and resilience.
Elaine Dezenski is managing partner at LumiRisk, LLC and senior adviser at the Center on Economic and Financial Power at the Foundation for Defense of Democracies. John Austin directs the Michigan Economic Center and is a nonresident senior fellow with the Brookings Institution and the Chicago Council on Global Affairs.