Choke Points, Concentration, and Systemic Fragility: Theory, Evidence, and Policy Implications for Critical Minerals, Semiconductors, and Healthcare in an Age of Hyperglobalization

Amavilah, Voxi Heinrich (2026): Choke Points, Concentration, and Systemic Fragility: Theory, Evidence, and Policy Implications for Critical Minerals, Semiconductors, and Healthcare in an Age of Hyperglobalization.

Abstract

Forty years of hyperglobalization have seeded choke points everywhere—from the Strait of Hormuz to Taiwan’s silicon fabs. Paul Krugman identifies the symptom; Nobel Laureate Michael Spence identifies the cause: decentralized markets systematically under invest in resilience because its benefits, unlike those of efficiency, are non-appropriable network-wide public goods. We formalize both diagnoses. Modeling choke points as two-stage Leontief production networks, we show that processing-stage concentration — measured by the Herfindahl–Hirschman Index (HHI) —amplifies supply shocks into out sized price volatility. Drawing on Samuelson’s (1952) spatial price equilibrium framework, we introduce the concept of incomparative advantages: developing countries hold comparative advantage in Stage 1 extraction while a single dominant nation (notably China) holds comparative advantage in Stage 2 processing, creating structural concentration that vertical integration could partially dissolve. Panel data for cobalt, lithium, and copper yield an instrumental-variables estimate of ˆβ = 0.612, confirm ing that processing-stage HHI causally raises price volatility. We extend the analysis to semiconductors, healthcare, financial infrastructure (SWIFT), and energy, ranking twelve global choke points by severity and likely disruption duration. Policy must choose among onshoring, international cooperation, and hybrid strategies—with cooperation cheaper but harder. Artificial intelligence amplifies near-term concentration risk while offering long-run resilience dividends through materials substitution and process acceleration

• Item Type: MPRA Paper
• Language: English
• Keywords: choke points, supply chain resilience, Herfindahl–Hirschman Index, Leontief technology, incomparative advantages, hyperglobalization, semiconductors, critical minerals
• Subjects: F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F6 - Economic Impacts of Globalization > F60 - General; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O25 - Industrial Policy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q31 - Demand and Supply ; Prices

References

[1] Acemoglu, Daron, Vasco Carvalho, Asuman Ozdaglar, and Alireza Tahbaz-Salehi. 2012. “The Network Origins of Aggregate Fluctuations.” Econometrica 80(5): 1977–2016. [2] Carvalho, Vasco M. 2014. “From Micro to Macro via Production Networks.” Journal of Economic Perspectives 28(4): 23–48. [3] Economics.Town. 2025. “Semiconductors: Global Supply Chain.” The Choke Point of the https://economics.town/growth-development/ semiconductors-global-supply-chain/. [4] Hausmann, Ricardo, Cesar A. Hidalgo, Sebasti´an Bustos, Michele Coscia, Alexander Simoes, and Muhammed A. Yildirim. 2011. The Atlas of Economic Complexity: Mapping Paths to Prosperity. Cambridge, MA: MIT Press. [5] Hidalgo, Cesar A., and Ricardo Hausmann. 2009. “The Building Blocks of Economic Complexity.” Proceedings of the National Academy of Sciences 106(26): 10570–10575. [6] International Energy Agency (IEA). 2021. The Role of Critical Minerals in Clean Energy Transitions. Paris: IEA. [7] Krugman, Paul. 2026. “When Hyperglobalization Meets Chaos.” Substack, March 23. https://paulkrugman.substack.com/p/when-hyperglobalization-meets-chaos. [8] Pindyck, Robert S. 2004. “Volatility and Commodity Price Dynamics.” Journal of Futures Markets 24(11): 1029–1047. [9] Samuelson, Paul A. 1952. “Spatial Price Equilibrium and Linear Programming.” American Economic Review 42(3): 283–303. [10] Supply Chain Shocks Task Force. 2021. Global Value Chains and Supply Chain Resilience. IMF Staff Discussion Note. [11] Shih, Willy C. 2020. “Global Supply Chains in a Post-Pandemic World.” Harvard Business Review, September–October. [12] Spence, Michael. 2026. “The Global Economy’s Many Chokepoints.” Project Syndicate (Substack), March 27. https://projectsyndicate.substack.com/p/the-global-economys-many-chokepoints. [13] Subramanian, Arvind, and Martin Kessler. 2013. “The Hyperglobalization of Trade and Its Future.” Peterson Institute for International Economics Working Paper 13-6. [14] Tom’s Hardware. 2026. “Global Chip Supply Chain Under Threat as US-Iran Conflict Enters Third Week.” March 16. [15] U.S. Geological Survey (USGS). 2025. Mineral Commodity Summaries 2025. Reston, VA: USGS. https://pubs.usgs.gov/publication/mcs2025. [16] World Bank. 2024. Commodity Markets Outlook. Washington, DC: World Bank