Digital Vulnerability and the Local Performances of Firms in Developing and Transition Countries

46 Pages Posted: 8 Sep 2017 Last revised: 3 Jun 2018

See all articles by Joel Cariolle

Joel Cariolle

Fondation pour les etudes et recherches sur le développement international (Ferdi)

Maëlan Le Goff

Banque de France

Olivier Santoni

Fondation pour les etudes et recherches sur le développement international (Ferdi)

Date Written: April 20, 2018

Abstract

Almost all coastal economies are now plugged into the global Internet through over 300 telecommunications submarine cables, so the global digital divide is shaped by two structural factors, independent from policy: the physical distance to infrastructures and the country’s exposure to infrastructure outages. We estimate the impact of Internet penetration on local firm performance by adopting an instrumental variable approach reflecting these two sources of digital vulnerability. Multilevel estimations are conducted over a sample of around 30,000 firms from about 2,600 locations in some 60 developing and transition countries. Results stress large impacts of higher Internet penetration rates at the location level, induced by lower digital vulnerability, on firms’ average revenue and labour productivity, and to a lesser extent, on temporary employment. This evidence is, amongst others, robust to the exclusion of exporters, big firms, foreign firms, and firms created after SMC arrival.

Keywords: NICT, Submarine cables, infrastructures, telecommunications, firm performance

JEL Classification: F02, O11, O33, O18, L25, L96

Suggested Citation

Cariolle, Joël and Le Goff, Maëlan and Santoni, Olivier, Digital Vulnerability and the Local Performances of Firms in Developing and Transition Countries (April 20, 2018). Available at SSRN: https://ssrn.com/abstract=3032902 or http://dx.doi.org/10.2139/ssrn.3032902

Joël Cariolle (Contact Author)

Fondation pour les etudes et recherches sur le développement international (Ferdi) ( email )

63, boulevard François-Mitterrand
Clermont-Ferrand, 63000
France
+33473177542 (Phone)

Maëlan Le Goff

Banque de France ( email )

Paris
France

Olivier Santoni

Fondation pour les etudes et recherches sur le développement international (Ferdi) ( email )

63 boulevard François Mitterrand
Clermont-Ferrand, 63000
France

Register to save articles to
your library

Register

Paper statistics

Downloads
27
Abstract Views
127
PlumX Metrics