Economic cost of internet, social media shutdown

Economic cost of internet, social media shutdown

By Qamar Bashir
Former Press Secretary to the President
Former Press Minister to the Embassy of Pakistan to France
Former MD, SRBC

Pakistan, like any nation, faces challenges in balancing the interests of its people, businesses, and the state. Decisions made by authorities, including interim governments, can sometimes prioritize immediate or specific objectives over broader economic and social impacts. The act of slowing down or terminating internet services, including access to social media platforms, is a significant decision that can have far-reaching consequences. Such actions, while intended to serve particular goals, can inadvertently hinder the country’s economic vitality by affecting business operations, trade, investment, and exports. They also pose risks to employment rates and GDP growth, potentially exacerbating poverty levels across the nation.

The internet and social media are modern-day lifelines for commerce, communication, and information exchange. Restricting access to these services can be likened to constricting the arteries of the nation’s economy, impeding the flow of business and innovation. While security and regulatory concerns are valid, solutions should be sought that balance these needs with the preservation of open and free internet access to support the nation’s socio-economic development.

According to international internet and social media watchdogs, during the 2024 elections in Pakistan, there were widespread disruptions to internet and mobile services on the orders of the Interior Ministry on the lame and excuse of “maintain law and order,”. Ironically, despite the assurance of the government and the Pakistan Telecommunication Authority multiple regions experienced internet blackouts and mobile network disruptions on the very election day. Independent watchdogs like NetBlocks confirmed these outages, indicating a significant impact on connectivity. Furthermore, the Open Observatory of Network Interference (OONI) reported that specific websites, including those of the PTI political party and investigative news platforms, were blocked prior to the elections. Cloudflare Radar observed significant drops in internet traffic for several local ISPs on the day of the elections, indicating widespread service disruptions.

The direct losses incurred to the nations can easily be calculated by inserting vital information in simple formulas. For example, Given Pakistan’s GDP of $1.24 trillion in February 2023 and forecasted merchandise trade of $95.96 billion in 2024, the daily GDP for 2024 is approximately $15.85 billion. With per day merchandise roughly at $1.23 billion and assuming a 50% impact on merchandise trade due to closures, the daily loss from shutting down the internet is about $615 million. For Twitter, the daily loss stands at approximately $14.25 million.

The indirect costs of internet shutdowns on businesses, trade, and investment are significant and multifaceted. Internet shutdowns disrupt economic activities, leading to losses in e-commerce, delays in time-sensitive transactions, increased unemployment, and interruptions in business-customer communications. These disruptions result in financial and reputational risks for companies, affecting both local businesses and international trade and investment.

For instance, in specific cases like Algeria, internet restrictions impacted various sectors, including the tourism industry, where businesses faced material losses due to hindered communications with customers and missed reservation deadlines.

In India, the economic impact of internet shutdowns was quantified at $1.9 billion for the first half of 2023 alone, highlighting the substantial direct economic losses incurred due to such disruptions. These shutdowns not only affect the immediate economic output but also have long-term consequences on investor confidence and the country’s digital infrastructure.

Such actions not only impose direct economic losses on an already strained economy but also lead to broader socio-economic instability. They not only infringe upon basic human rights guaranteed by the Constitution of Pakistan and international human rights standards but also erode the country’s democratic fabric by undermining the freedom of information and press. The irony is stark as these actions, meant to secure political gains or regulate the political narrative, result in billions of dollars in losses to the national economy, contributing to its vulnerability. This situation leaves political parties wary of assuming power in the aftermath of the 2024 elections, given the looming economic challenges compounded by such disruptive practices.

When a country’s actions to block social media platforms, slow down the internet, and disrupt internet services lead to widespread condemnation by international bodies like the United Nations, Amnesty International, and Transparency International, as well as foreign leaders and institutions, the resulting costs can be multifaceted and significant. These costs extend beyond direct and indirect economic impacts to include the erosion of the country’s soft image, which can lead to further financial, business, tourism, and soft capital losses.

The erosion of a country’s soft image can be even more detrimental in the long term. Condemnation by international bodies and foreign leaders can lead to a decline in investor confidence, reduced foreign direct investment, and a negative impact on the country’s diplomatic relations and international standing. This can further result in decreased tourism revenues, as potential visitors may choose to avoid a country perceived as politically unstable or repressive in terms of digital rights.

Moreover, the disruption of internet services can hinder innovation and the digital economy’s growth, essential components of modern economic development. It can also affect the country’s attractiveness as a destination for international events, conferences, and cultural exchanges, further impacting its soft capital and potential revenue streams.

Overall, the indirect costs of such actions, compounded by international condemnation, can significantly hinder a country’s economic growth, international reputation, and ability to engage in global commerce and diplomacy effectively.

To safeguard the right to internet and social media access, ensuring economic, business, trade, and innovation opportunities remain unhampered, a comprehensive and collaborative approach is essential. Governments, alongside legislative bodies, must enact and enforce laws that protect internet access as a fundamental right, with a clear emphasis on transparency, accountability, and adherence to international human rights standards.

This legal framework should be designed to prevent unwarranted internet shutdowns, maintain neutrality, and ensure open access, with independent regulatory bodies established to oversee compliance and enforce regulations.

Additionally, policies should mandate transparency in actions by both government and ISPs, especially concerning decisions that may affect internet access, ensuring any restrictions are justified, transparent, and subject to public scrutiny.

Moreover, civil society, the judiciary, and political entities must play active roles in advocating for and protecting internet freedom. This involves promoting digital literacy to empower citizens to demand their digital rights, strengthening data protection to build trust in digital services, and supporting the pivotal role of independent media and civil society in holding power to account.

International cooperation is also vital, as global collaboration fosters a supportive environment for internet freedom, sharing best practices and advocating for digital rights on the world stage.

Inclusive policy making, involving a broad spectrum of stakeholders, ensures diverse interests are represented and the public good is protected, fostering an environment conducive to growth, innovation, and the free exchange of ideas.