[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-113301-en":3,"doc-seo-113301-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},113301,8796095461610,"Oliver","https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c",8,"Research & Report","Infrastructure Quality and FDI Inflows - Evidence from the Arrival of High-Speed Internet in Africa","Does ambient infrastructural quality affect foreign direct investment (FDI) in developing countries? This paper examines how the arrival of high-speed internet in Africa triggered FDI, and how complementary infrastructure—electricity and road connectivity—amplifies that effect. Causal estimates rely on plausibly exogenous variation from the staggered arrival of submarine fiber-optic cables and spatial differences in terrestrial fiber networks. Results show internet access increases FDI, especially in services, with finance, technology, retail, and health as key beneficiaries, and highlight governance and incumbent-firm performance as plausible mechanisms.","Pub lic Disclosure Authorized Pub lic Disclosure Authorized  \nThe World Bank Economic Review, 38(1), 2024, 1–23  \n[https://doi.org10.1093/wber/lhad021](https://doi.org10.1093/wber/lhad021)  \nArticle  \nInfrastructure Quality and FDI Inflows: Evidence from the Arrival of High-Speed Internet in Africa  \nJustice Tei Mensah and Nouhoum Traore  \nAbstract  \nDoes 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 region. It also explores the role of complementary infrastructure, such as access to electricity and road connectivity, in amplifying the impact of internet connectivity on investment. To causally estimate impacts, the paper exploits plausibly exogenous variations in access to high-speed internet induced by the staggered arrival of submarine fiber-optic internet cables and spatial variations in terrestrial fiber cable networks across locations on the continent. Findings from the paper indicate that access to high-speed internet induces FDI, particularly in the service sector, with the finance, technology, retail, and health services subsectors as the main beneficiaries. Access to (hard) infrastructure, such as electricity and roads, amplifies the impact of internet connectivity on FDI, thus highlighting the role of complementarities in the impact of infrastructure. Further, the results suggest that improvement in quality of governance and increased performance of incumbent firms are plausible mechanisms.  \nJEL classification: O12, O16, F21, F23, G21, N77  \nKeywords: internet, FDI, services, banking, technology  \n1. Introduction  \nForeign direct investment (FDI) is an important driver of economic growth as it facilitates technology transfer and job creation in host economies (Smarzynska Javorcik 2004; Toews and Vézina 2021) .1 Asa result, countries embark on massive investment promotion drives aimed at reducing the transaction costs of investors by providing them with easy access to information on investment opportunities in the country, including understanding and overcoming the legal and regulatory hurdles involved in setting up  \nJustice Tei Mensah (corresponding author) is an economist in the Office of the Chief Economist for Africa at the World Bank. His email address is [jmensah2@worldbank.org. Nouhoum Traore](jmensah2@worldbank.org. Nouhoum Traore) is an economist at the International Finance Corporation of the World Bank Group. His email address is [ntraore3@ifc.org. Funding for](ntraore3@ifc.org. Funding for) this research was provided by the World Bank’s Africa Chief Economist Office, and the Development Impact Department at IFC. We wish to express our profound gratitude to the editor, Nina Pavcnik, and two anonymous reviewers for their constructive comments on the paper. In addition, comments and support from Moussa Blimpo, Mark Dutz, Albert Zeufack, Valentina Saltane, Camilo Mondragon-Velez, Issa Faye, Andrew Dabalen, and seminar/conference participants at IFC, World Bank, PSDRN (2021), and CSAE Conference on African Development (2022) are deeply appreciated. All errors and views expressed in this paper are those of the authors. They do not necessarily represent the views of the International Finance Corporation or the World Bank. A supplementary online appendix is available with this article at The World Bank Economic Review website.  \n1 There is also a large body of literature showing mixed evidence on the impact of FDI on destination markets. See for instance, Edwards and Jenkins (2015), Abebe, McMillan, and Serafinelli (2018), and Crescenzi and Limodio (2021) .  \n􀀂C 2023 International Bank for Reconstruction and Development / The World Bank. Published by Oxford University Press.  \nDownloaded from [https://academic.oup.com/wber/article/38/1/1/7240369 by Joint Bank/Fund Library user on 02 February 2024](https://academic.oup.com/wber/article/38/1/1/7240369 by Joint Bank/Fund ","cbCaivsVedAfRmFC","https://ap.wps.com/l/cbCaivsVedAfRmFC","pdf",4253749,1,23,"English","en",105,"# Introduction\n## Causal identification using submarine cable arrival\n## Mechanisms: complementary infrastructure and governance","[{\"question\":\"How does the paper explain the link between high-speed internet access and FDI in Africa?\",\"answer\":\"The study argues that improved internet connectivity triggered FDI inflows, using causal variation from the staggered arrival of submarine fiber-optic cables and spatial differences in terrestrial fiber networks.\"},{\"question\":\"Which sectors benefit most from internet-induced FDI according to the findings?\",\"answer\":\"The paper finds the largest effects in the service sector, with finance, technology, retail, and health services as main beneficiaries.\"},{\"question\":\"What role do electricity and roads play in amplifying the impact of internet connectivity on investment?\",\"answer\":\"Access to complementary hard infrastructure such as electricity and roads strengthens the effect of internet connectivity on FDI, emphasizing infrastructure complementarities.\"}]",1784502375,58,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":85,"head_meta":87,"extra_data":89,"updated_unix":27},"infrastructure-quality-and-fdi-inflows-evidence-from-the-arrival-of-high-speed-internet-in-africa","",{"@graph":35,"@context":84},[36,53,67],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/infrastructure-quality-and-fdi-inflows-evidence-from-the-arrival-of-high-speed-internet-in-africa/113301/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":61,"encodingFormat":60,"isAccessibleForFree":62,"interactionStatistic":63},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-19",true,{"@type":64,"interactionType":65,"userInteractionCount":4},"InteractionCounter",{"@type":66},"ViewAction",{"@type":68,"mainEntity":69},"FAQPage",[70,76,80],{"name":71,"@type":72,"acceptedAnswer":73},"How does the paper explain the link between high-speed internet access and FDI in Africa?","Question",{"text":74,"@type":75},"The study argues that improved internet connectivity triggered FDI inflows, using causal variation from the staggered arrival of submarine fiber-optic cables and spatial differences in terrestrial fiber networks.","Answer",{"name":77,"@type":72,"acceptedAnswer":78},"Which sectors benefit most from internet-induced FDI according to the findings?",{"text":79,"@type":75},"The paper finds the largest effects in the service sector, with finance, technology, retail, and health services as main beneficiaries.",{"name":81,"@type":72,"acceptedAnswer":82},"What role do electricity and roads play in amplifying the impact of internet connectivity on investment?",{"text":83,"@type":75},"Access to complementary hard infrastructure such as electricity and roads strengthens the effect of internet connectivity on FDI, emphasizing infrastructure 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