If an underwater internet cable snaps, it doesn't just kill the Wi-Fi—it can actually tank a country's entire economy by 7%.
We tend to think of the digital economy as a resilient, invisible cloud, but this research shows it is tethered to fragile physical wires. When these cables break, the economic shock is so systemic that it triggers long-term contractions in private consumption and credit that most national economies are currently unprepared to handle.
Digital Disasters: The Macroeconomic Costs of Submarine Cable Breaks
SSRN · 6349818
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 rando