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Intentional Disruptions to Internet Access Cost Countries $2.4 Billion Last Year

Around the world, digital technology is seen as vital for economic development. In the U.S. alone, the Internet accounts for about six percent of the entire economy. Digital technology has expanded its role in the global economy in recent years, as both developed and developing nations have become increasingly reliant on the Internet.

The centrality of the Internet to social and economic life recently led the United Nations to enact a resolution supporting the “promotion, protection and enjoyment of human rights on the Internet.” The resolution specifically condemns state efforts to intentionally prevent or disrupt access to information online.

Yet powerful forces continue to threaten the vitality of the Internet. In recent years, a number of countries have blocked particular applications, shut down specific digital services, turned off mobile telecommunications services, or disrupted the entire Internet. Government officials give many reasons for ordering these disruptions, such as safeguarding government authority, reducing public dissidence, fighting terrorism, maintaining national security, or protecting local businesses.

Those actions separate people from their family, friends, and livelihoods, undermine economic growth, interfere with the startup ecosystem, and threaten social stability by interrupting economic activity.

In my new paper, “Internet shutdowns cost countries $2.4 billion last year,” I analyzed the economic impact of temporary Internet shutdowns. I examined 81 short-term shutdowns in 19 countries over the past year and estimated their impact on the Gross Domestic Product (GDP) of those nations. Based upon this analysis, I found that between July 1, 2015 and June 30, 2016, Internet shutdowns cost at least US$2.4 billion in GDP globally.

Number of government Interferences with Digital Networks, 1995-2010 - Source: Philip Howard, Sheetal Agarwal, and Muzammil Hussain, “The Dictators’ Digital Dilemma: When Do States Disconnect
Their Digital Networks?” Brookings Issues in Technology Innovation, October, 2011

Economic losses include $968 million in India, $465 million in Saudi Arabia, $320 million in Morocco, $209 million in Iraq, $72 million in the Republic of the Congo, $69 million in Pakistan, $48 million in Syria, and $35 million in Turkey, among other places. These are conservative estimates that consider only reductions in economic activity and do not account for tax losses or drops in investor, business, and consumer confidence.

Examples of Internet disruptions include Turkey denying access to social media applications, Indian states shutting off mobile networks during student testing periods, and Brazil blocking online video calls and instant messaging. The majority of these blackouts occurred in the Middle East and South Asia, with India, Iraq, non-ISIS Syria, and Pakistan accounting for 71 percent of recorded instances.

Internet disruptions slow growth, cost governments tax revenue, weaken innovation, and undermine consumer and business confidence in a country’s economy. As Internet-powered businesses and transactions continue to grow, they represent an increasingly significant portion of global economic activity. If shutdowns continue, the damage from connectivity disruptions will become ever more severe.

Read the paper “Internet Shutdowns cost countries $2.4 billion last year” here. In addition, the Center for Technology Innovation hosted a discussion titled “From the Arab Spring to cheating students in India: The economic costs of internet shutdowns” on October 6 at the Brookings Institution. The video recording of the event is available here. Maximilian Fiege contributed to this post.

By Darrell M. West, VP Governance Studies, Director of Center for Technology Innovation at Brookings

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