Net Loss: An econometric method to measure the impact of Internet shutdowns

Abstract

The economic costs of Internet shutdowns are far-reaching and widespread, and span beyond the simple disruption to communication networks that are reliant on access to the Internet. Existing work on the impacts of the Internet shutdowns does not extensively exploit the fact that they can have adverse effects on the local economy in terms of output, employment, and investments. There is a lack of rigorous economic analysis of the impacts of shutdowns that can be more broadly applied to specific regions that account for variations in the intensity (or type) of shutdowns, as well as go beyond providing broad GDP cost estimates which may be misleading. This paper aims to bridge this gap by providing an econometric approach to estimate the impact of Internet shutdowns on GDP, employment, and foreign direct investment using panel data on 92 countries. We show that a point increase in the likelihood of an Internet shutdown was statistically significantly associated with a 15.6 percentage point reduction in the GDP per capita on average and every additional day of an Internet shutdown costs $86.58 per person on average.