Economic impacts of submarine fiber optic cables and broadband connectivity in Malaysia

Abstract

This study explores the economic impact of the internet connectivity delivered by submarine fiber optic cables (“subsea cables”) on Malaysia. Subsea cables are the global backbone of the internet, connecting people, businesses, and economies around the world. Focusing specifically on subsea cable landings beginning in 2009, we found that GDP per capita was 6.9% greater by 2015 than it otherwise would have been. We also found that, although there was no change in national employment levels, there was a shift towards services. More than 400,000 service-sector jobs replaced old-economy ones. Relative to the number of new jobs, there is much greater economic output. This means that the
connectivity delivered by subsea cables has translated into impressive growth in GDP per capita mostly by facilitating modernization and enhanced productivity in the Malaysian economy. Over the long-term (1992-2017), we found that for every 10% increase in international bandwidth consumption per internet user, there was a 0.24% increase in GDP per capita. This finding led us to consider what the impact of broadband penetration was overall. We found that every 10% increase in broadband penetration led to a 0.19% increase in GDP per capita (2001-2016). In both instances, we controlled for such important factors as economic trends, population growth, and changes in technology.