“Choke Points” – Henry Farrell, Abraham L. Newman
To keep the global economy working smoothly, crucial resources such as money, information, and components pass through an intricate system of conduits. But while this critical invisible infrastructure may seem to be decentralized and have multiple redundancies, it has significant choke points. A new political risk comes from powerful, wealthy statesespecially the United Statesthat use legal authority or coercion to turn economic networks into tools of domination, ensnaring businesses in the process. The authors encourage multinational businesses to analyze their exposure to network choke points, noting that lobbying government officials and teaming up with industry peers to resist coercion can mitigate such risks.
To conduct international commerce, businesses have built an intricate system of networks that move money, information, and components around the world. These networks may look decentralized, but all too frequently, they have major choke points. The majority of global finance transactions, for instance, are relayed through a single organization in Belgium. Many global tech firms depend heavily on the chips Qualcomm makes for Android devices. A huge proportion of global communications are routed through private servers on U.S. soil.
Increasingly, these choke points are being turned into political weapons by governments, and companies are getting caught in the cross fire. The stakes are high: Firms can go out of business if they’re cut off from critical networks. They need to analyze their exposure and develop a strategy to protect themselves.
