To represent something abstract or intangible as material; to embody
(psychology) To attribute emotions etc to external circumstances; to project
(economics) To direct to others, as costs or benefits.
Offering high-quality software as open-source externalizes benefits to a large community, but also externalizes much of the cost of testing and further development.
Operating a low-cost, high-pollution manufacturing process externalizes costs in the form of adverse human health consequences and ecosystem effects.