Effects of internet connectivity on the economic lives of people in the global south
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How exactly did the internet –the “greatest invention of our time” (The Economist, 2012) change the lives of people in developing countries? In India, for example, less than 0.5% of the population had internet access in 2000; but by March 2023, there were 881 million internet subscribers (TRAI, 2023). These 881 million people today us the internet to socialize, search, shop, study, share ideas, seal deals, save money –—raising important questions about its economic impacts. Who benefits from digital expansion, and who is left behind? Given that 96% of Indian users access the internet via mobile devices, this study focuses on the rollout of 3G, which marked the first widespread mobile internet access. Using two separate proprietary datasets from India’s largest banks, including one that contains over 75 million bank transactions from 429,000 individuals over eight years, we aim to measure how mobile internet affects income, consumption, payment preferences, insurance uptake, and inequality. To ensure causality, we exploit a natural experiment: delays in 3G rollout caused by a telecom corruption scandal. We use the staggered acquisitions of affected firms as an instrument for internet expansion. This allows us to isolate the impact of internet access from other economic factors.
Principal Investigator (PI): Abhiroop Mukherjee
Department/ Division: Finance
This project is funded by the HKUST IEMS Research Grants 2025.
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