If an underwater internet cable snaps, it doesn't just kill the Wi-Fi—it can actually tank a country's entire economy by 7%.
March 27, 2026
Original Paper
Digital Disasters: The Macroeconomic Costs of Submarine Cable Breaks
SSRN · 6349818
The Takeaway
We tend to think of the digital economy as a resilient, invisible cloud, but this research shows it is tethered to fragile physical wires. When these cables break, the economic shock is so systemic that it triggers long-term contractions in private consumption and credit that most national economies are currently unprepared to handle.
From the abstract
While productivity gains from digital technology diffusion have materialized only gradually, the macroeconomic costs of abrupt losses in cross-border digital connectivity may be much starker and remain far less understood. In this paper, I estimate the growth costs of accidental disruptions to submarine cables-the international backbone of cross-border data traffic-using a new dataset covering a large panel of high-, middle-, and low-income countries from 2008 to 2020. Exploiting plausibly rando