The Macroeconomic Impacts of Digitalization in Sub-Saharan Africa: Evidence from Submarine Cables

38 Pages Posted: 4 Feb 2022

See all articles by Felix Simione

Felix Simione

International Monetary Fund (IMF)

Yiruo Li

Independent

Date Written: April 1, 2021

Abstract

In recent decades, Sub-Saharan Africa (SSA) has experienced rapid advances in digitalization, with unprecedented growth in internet penetration. This paper investigates the impact of internet penetration in SSA on real GDP growth, productivity, and sector output and employment. The analysis treats the arrival of submarine cables to the region as a natural experiment to estimate the impacts of internet penetration. The findings suggest that higher internet penetration increases real per capita GDP growth and productivity, and impacts the composition of both output and employment, with an increasing share from the services sector.

Keywords: internet penetration, growth effect, macroeconomic impacts of digitalization, arrival IV, employment share, productivity database, Employment, Productivity, Digitalization, Estimation techniques, Labor productivity, Africa, Sub-Saharan Africa, Global

JEL Classification: F31, E26, E24, E23, O33, C13, J24

Suggested Citation

Simione, Felix and Li, Yiruo, The Macroeconomic Impacts of Digitalization in Sub-Saharan Africa: Evidence from Submarine Cables (April 1, 2021). IMF Working Paper No. 2021/110, Available at SSRN: https://ssrn.com/abstract=4026284

Felix Simione (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Yiruo Li

Independent

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