Defence resilience has become the backbone of the global economy

Russia’s shadow fleet has been deliberately targeted at sea. Trade routes and chokepoints are being tested. Access to critical materials is tightening, not through market forces but political intent. These are not background geopolitical tensions. They are direct interventions in the economic system.

Yet as leaders arrive in Davos, the conversation will largely return to familiar ground: inflation, growth, productivity and capital allocation. What is missing is the recognition that security has become the primary infrastructure on which all of these depend. When security fails, markets do not simply reprice — they stall.

For decades, globalisation relied on an assumption of neutrality: that supply chains, logistics and access would remain broadly apolitical. That assumption no longer holds. Interdependence has been weaponised. States now compete by controlling flows — of energy, materials, data and manufacturing capacity — rather than merely territory.

This shift has exposed a dangerous mismatch. While geopolitical pressure moves at speed, the defence industrial systems meant to absorb and respond to it remain slow, concentrated and brittle. We built them for efficiency in an era of relative stability. Today, that efficiency has become a liability.

The traditional defence model is increasingly misaligned with economic reality. It depends on a small number of prime contractors, vertically integrated supply chains and long, rigid production timelines. Risk is concentrated, substitution is slow and failure cascades quickly. What was once seen as industrial strength is now a source of systemic fragility.

This is no longer a narrow defence concern. It is an economic one.

When defence supply chains fracture, the effects are felt far beyond ministries and military planners. The same shipping, insurance and industrial networks support the wider economy. Disruption pushes costs up, slows production and undermines confidence. Security shocks now hit markets directly. Energy prices jump. Insurance premiums rise. Industrial production is delayed. Investment decisions are postponed. Security shocks now transmit directly into markets, balance sheets and household costs.

The response cannot simply be more spending or louder rhetoric. What is required is a structural shift in how defence capability is organised — from monolithic production towards a federated industrial ecosystem designed for disruption.

Federation changes the underlying logic. Instead of relying on a narrow set of suppliers and fixed pathways, it builds resilience through diversity and interoperability. Multiple qualified suppliers at critical nodes. Common standards that allow rapid substitution. Digital integration that makes dependencies visible and enables fast reconfiguration when pressure hits.

In such a system, failure is contained rather than catastrophic. If one supplier is cut off by sanctions, others can step in. If a logistics corridor is contested, alternatives are already certified. If a component becomes unavailable, design standards allow replacement without months of requalification. The system absorbs shocks instead of amplifying them. This is not inefficiency. It is risk management.

Modern finance understands this instinctively. No investor would tolerate a portfolio built around a single point of failure. Yet too much of our defence industrial base still operates on precisely that principle. Resilience requires redundancy — not excess for its own sake, but optionality when conditions change.

Critically, a federated approach also strengthens the wider economy. It broadens participation across the industrial base, allowing smaller and more innovative firms to contribute capability. It shortens feedback loops, accelerates adaptation and reduces the strategic leverage of any single supplier or geography. In doing so, it aligns defence resilience with long-term competitiveness.

For investors, this shift is already becoming material. Strategic dependency is now a pricing factor. Companies and countries unable to map their exposure to geopolitical disruption, or to demonstrate how they would pivot under stress, are increasingly viewed as higher risk. Assumptions of a return to the stability of the past look less like optimism and more like complacency.

For governments, the implications are equally stark. Defence strength can no longer be measured primarily by headline budgets. What matters is resilience: diversity of supply, speed of reconfiguration, and visibility across the industrial base. Economic ministries and defence planners must speak the same language of systemic risk.

Davos prides itself on anticipating the future rather than reacting to the past. This year, that means recognising a basic truth: there is no modern economy without resilient security. Growth strategies, energy transitions and digital ambitions all rest on supply chains and infrastructures that must now operate under constant geopolitical pressure.

Security is not a drag on prosperity. It is the architecture that makes prosperity possible. Until we rebuild it for the world as it is — fast-moving, contested and unpredictable — economic ambition will continue to rest on foundations that are dangerously thin.

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Blythe Crawford CBE is the former Commandant of the Air and Space Warfare Centre which led UK efforts to support Ukraine and Visiting Fellow at the University of Oxford Changing Character of War Centre.

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