Technicians monitor data flow in the control room of an internet service provider in Tehran
Report

Internet shutdowns cost countries $2.4 billion last year

Darrell M. West

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, says Darrell West in a new paper.

In “Internet shutdowns cost countries $2.4 billion last year,” West analyzes the economic impact of temporary internet shutdowns. He examines 81 short-term shutdowns in 19 countries over the past year and estimates their impact on the Gross Domestic Product (GDP) of those nations. Based upon this analysis, West finds that between July 1, 2015 and June 30, 2016, internet shutdowns cost at least US$2.4 billion in GDP globally.

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.

Clearly, internet disruptions are creating significant detrimental impacts on economic activity in a number of nations around the world. And, as West writes, “As the digital economy expands, it will become even more expensive for nations to shut down the internet. Without coordinated action by the international community, this damage is likely to accelerate in the future and further weaken global economic development.”

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