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

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