Shut Down the Internet, and the Economy Goes With It

Government leaders who turn off the Internet as a means of censorship are shooting their economies in the foot.

Mike Orcuttarchive page

October 24, 2016

Governments damage their economies when they shut down Internet applications and services, according to a new analysis.

During the past year, 81 disruptions in 19 countries cost those economies at least $2.4 billion, according a study by Darrell West at the Brookings Institution that estimates the cost of disrupting a nation’s online activities.

Governments can cut off citizens’ Internet access for a variety of reasons, including to quell dissent or force a company to comply with a law. In 2011, the Egyptian government shut down access for five days to prevent communication between protesters, while more recently, Brazil blocked the messaging app WhatsApp after it refused to comply with requests for user data.

As economic activity increasingly relies on the Internet, these kind of disruptions are “very counterproductive,” says West.

To calculate the dollars lost to complete national shutdowns, West relied on projections from the Boston Consulting Group, which has estimated how much of a country’s GDP relies on having Internet access. These numbers vary, ranging from 12.4 percent in the U.K. to 1.4 percent in Indonesia. West used subscription data from the World Bank to estimate the cost of shutting down mobile networks, and recent research from MIT economists was used to tease out the value of individual digital apps. His model also drew upon recent research that attempts to account for the number of jobs that the Internet makes possible.

The figures are rough, particularly because data is hard to come by in developing countries. But West says they are also likely an underestimate, since e-commerce is growing so quickly.

In some places, like countries in Africa where people rely heavily on mobile money, the ramifications are especially severe. Since there hasn’t been much analysis of the economic cost, West says, he thinks government leaders may not even be thinking about it. But when governments shut down the Internet, they are “shooting their economies in the foot,” he says.