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

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  • Mensah,Justice Tei
  • Traore,Nouhoum-000531164

Abstract

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

Suggested Citation

  • Mensah,Justice Tei & Traore,Nouhoum-000531164, 2022. "Infrastructure Quality and FDI Inflows : Evidence from the Arrival of High-Speed Internet in Africa," Policy Research Working Paper Series 9946, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9946
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    References listed on IDEAS

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    Keywords

    Energy Policies & Economics; Telecommunications Infrastructure; Financial Sector Policy; International Trade and Trade Rules; Investment and Investment Climate;
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