Digital Disasters: The Macroeconomic Costs of Submarine Cable Breaks

Joël Cariolle ()
Additional contact information
Joël Cariolle: FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne

Working Papers from HAL

Abstract: While productivity gains from digital technology diffusion have materialized only gradually, the macroeconomic costs of abrupt losses in cross-border digital connectivity may be much starker and remain far less understood. In this paper, I estimate the growth costs of accidental disruptions to submarine cables—the international backbone of cross-border data traffic—using a new dataset covering a large panel of high-, middle-, and low-income countries from 2008 to 2020. Exploiting plausibly random variation in the timing and duration of disruptions, I use a dynamic staggered difference-in-differences design to quantify both direct losses for disrupted countries and spillovers to regional non-disrupted peers. I find robust, large, and persistent growth losses, alongside synchronized contractions in private consumption and trade. Disruptions create within-region reallocation in favor of non-disrupted economies. Accounting for spatial spillovers, the total effect is negative and substantial, implying a cumulated 7 percentage points drop in GDP per capita growth in the medium run. Evidence on bandwidth-intensive services trade, foreign investment, and labor productivity points to reallocation forces, accompanied by a tightening of credit to domestic actors and a weakening of cross-border banking relationships. Overall, submarine cable failures act as systemic connectivity shocks with sizable and long-lasting consequences for affected and nearby economies.

Keywords: submarine cables; internet disruptions; economic growth; digital infrastructure; disaster (search for similar items in EconPapers)
Date: 2026-03-10
Note: View the original document on HAL open archive server: https://hal.science/hal-05544990v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05544990v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05544990

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().