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Infrastructure Quality and FDI Inflows : Evidence from the Arrival of High-Speed Internet in Africa (English)

Does ambient infrastructural quality affect foreign direct investment (FDI) in developing countries? This paper investigates how the arrival of high-speed internet in Africa triggered FDI into the banking and technology services sectors. It also explores the role of complementary infrastructure, such as access to reliable electricity, in amplifying the impact of internet connectivity on investment. The identification strategy exploits plausibly exogenous variations in access to high-speed internet induced by the staggered arrival of submarine fiber-optic internet cables and the subsequent rollout of terrestrial fiber cable networks across locations on the continent. Findings from the paper show that access to high-speed internet induces FDI into the banking and technology sectors. However, the impact pertains mainly to countries with access to reliable electricity, thus highlighting the role of complementarities in the impact of infrastructure.

Details

  • Author

    Mensah,Justice Tei, Traore,Nouhoum-000531164

  • Document Date

    2022/02/23

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS9946

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Africa,

  • Region

    Africa,

  • Disclosure Date

    2022/02/23

  • Disclosure Status

    Disclosed

  • Doc Name

    Infrastructure Quality and FDI Inflows : Evidence from the Arrival of High-Speed Internet in Africa

  • Keywords

    submarine cable; technology service; Cost of Doing Business; technology sector; speed internet; supply of electricity; backbone network; foreign direct investment; business process outsourcing; investment in technology; Access to Electricity; cost of service; theory of change; educated labor force; access to information; Agricultural Value Chain; freight transport services; fuel demand; volume of transaction; other sectors; technology adoption; real gdp; banking sector; standard error; digital service; electricity provision; increased investment; time t; subnational levels; summary statistic; emerging economy; infrastructure quality; satellite transmission; natural experiment; Business Regulation; macroeconomic control; destination market; indicator variable; household use; productive use; Economic Studies; Central Banking; broadband internet; positive impact; economic study; real time; Emerging economies; cable network; banking operation; social networking; Capital Investments; interbank lending; overhead cost; destination country; source country; middle class; job applicants; digital marketplace; landlocked country; online presence; online retail; mobile payments; tech company; empirical analysis; rising demand; digital economy; online retailer; rapid urbanization; share company; social media; content aggregation; creating opportunity; cross-border investment; Online Banking; investment barrier; electricity system; study period; available data; macroeconomic variable; electricity reliability; electricity access; net effect; reliable access; digital equipment; electricity service; knowledge diffusion; trade costs; power outage; energy economics; major utility; import penetration; manufacturing sector; development study; electricity shortage; inadequate provision; Public Infrastructure; private investment; backward linkages; respective year; level analysis; macroeconomic indicator; connection cost; several countries; telecom company; infrastructural investment; bandwidth capacity; undersea cable; coastal countries; cross-country variation; positive shock; south sudan; satellite connection; macro control; baseline equation; causal impact; temporal variation; baseline analysis; sample mean; optic cable; baseline model; baseline estimates; time lag; infrastructure service; local economy; cross-country regression; administrative datum; electricity outages; transaction cost; investment opportunities; deferred payment; Tax Holiday; cable link; bandwidth speed; net bank; estimate impact; information asymmetry; present evidence; high concentration; foreign investor; cultural distance; african banks; host economy; internet connectivity; open access; development policy; modern technology; Research Support; Job Creation; research program; massive investment

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Citation

Mensah,Justice Tei Traore,Nouhoum-000531164

Infrastructure Quality and FDI Inflows : Evidence from the Arrival of High-Speed Internet in Africa (English). Policy Research working paper,no. WPS 9946 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/586221645627068449/Infrastructure-Quality-and-FDI-Inflows-Evidence-from-the-Arrival-of-High-Speed-Internet-in-Africa