Breaking Invisible Barriers: Does Fast Internet Improve Access to Input Markets?

Banu Demir, Beata Javorcik, Piyush Panigrahi, Banu Demir Pakel and Beata Smarzynska Javorcik
Authors registered in the RePEc Author Service: Beata Smarzynska Javorcik

No 11567, CESifo Working Paper Series from CESifo

Abstract: This paper explores how improved internet infrastructure impacts supply chains and economic activity, focusing on Türkiye. Using the expansion of fiber-optic networks and firm-to-firm transaction data, we find that better connectivity shifts input sourcing to well-connected regions and diversifies supplier networks. We estimate a spatial equilibrium model with endogenous network formation and rational inattention and find that high-speed internet reduced information acquisition and communication costs. Enhanced connectivity increased real income by 2.2% in the median province. Our findings underscore the importance of digital infrastructure investments in fostering economic growth by improving supply chain efficiency and broadening firms’ access to suppliers.

Keywords: digitalization; production networks; supply chains (search for similar items in EconPapers)
JEL-codes: C63 D22 D83 E22 F14 F15 H41 H54 L14 L86 O18 O33 Q55 R12 R58 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ict and nep-ure
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Working Paper: Breaking Invisible Barriers: Does Fast Internet Improve Access to Input Markets? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11567

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