Economics

Mar 27, 2026 Michael Spence

In a highly decentralized and competitive network, investors are incentivized to optimize for efficiency rather than for resilience. This dynamic has produced a highly fragile global economy, owing to single points of failure that extend far beyond geographical bottlenecks like the Strait of Hormuz.

MILAN – Iran’s effective closure of the Strait of Hormuz, through which about a fifth of the world’s oil and a quarter of its fertilizer passes, has highlighted a well-known vulnerability of our complex networked global economy: a single point of failure can create massive and costly disruptions. Yet such points of failure have been proliferating for decades.