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Breaking Invisible Barriers: Does Fast Internet Improve Access to Input Markets?

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  • Demir, Banu
  • Javorcik, Beata
  • Panigrahi, Piyush

Abstract

This paper explores how improved internet infrastructure impacts supply chains and economic activity, focusing on Türkiye. Using the expansion of fiber-optic networks and firm-to-firm transaction data, we find that better connectivity shifts input sourcing to well-connected regions and diversifies supplier networks. We estimate a spatial equilibrium model with endogenous network formation and rational inattention and find that high-speed internet reduced information acquisition and communication costs. Enhanced connectivity increased real income by 2.2% in the median province. Our findings underscore the importance of digital infrastructure investments in fostering economic growth by improving supply chain efficiency and broadening firms’ access to suppliers.

Suggested Citation

  • Demir, Banu & Javorcik, Beata & Panigrahi, Piyush, 2025. "Breaking Invisible Barriers: Does Fast Internet Improve Access to Input Markets?," CEPR Discussion Papers 19827, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19827
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    File URL: https://cepr.org/publications/DP19827
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