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

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