Séminaire d’économie de Bordeaux

Joël Cariolle

(FERDI, Université Clermont Auvergne,  CNRS-IRD-CERDI)

 » Digital disasters: The macroeconomic costs of submarine cable breaks « 

Abstract:
 » I estimate the macroeconomic costs of disruptions to submarine cables—the backbone of international data traffic—using a new dataset covering high-, middle-, and low-income countries from 2008 to 2020. Exploiting plausibly random variation in the timing and duration of disruptions, I use a dynamic staggered difference-in-differences design to quantify both direct losses for disrupted countries and spillovers to regional non-disrupted peers. I find robust, large, and persistent growth losses, alongside synchronized contractions in private consumption and trade. Disruptions create within-region reallocation in favor of non-disrupted economies. Accounting for spatial spillovers, the total effect is negative and substantial, a typical 10 repair-days disruption implying a cumulated 5-7 percentage points drop in GDP per capita growth in the medium run. Evidence on bandwidth-intensive services trade, foreign investment, and labor productivity points to reallocation forces, accompanied by a tightening of credit to domestic actors and a weakening of cross-border banking relationships. Route redundancy fully dampens estimated losses, pointing to digital infrastructure resilience as a first-order policy margin. « 

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