ious sectors in Africa. In addition, we explore the role of complementary infrastructure, such as access to electricity and roads, in amplifying the impact of Internet connectivity. To this end, we assemble unique project-level data on sectoral FDI together with data on Internet infrastructure to estimate the spillover effects of fast Internet connectivity on FDI flows. The spatial and time granularity of our datasets allows us to undertake the analysis at the subnational level. Our identification strategy is a difference-in-difference (DiD) design that relies on the plausibly exogenous variation in access to high-speed Internet induced by the staggered arrival of submarine Internet cables across countries and the spatial variation in access to the terrestrial fiber backbone network within countries. Essentially, we compare districts connected to the terrestrial fiber network to those unconnected, and explore the changes in the FDI flows to these districts before and after the arrival of the submarine cables in the respective countries.

Three main findings emerge from the analysis. First, the arrival of high-speed Internet played a key role in stimulating FDI to Africa. However, the effects are largely concentrated in the service sector, with finance, technology, health and retail subsectors as the main beneficiaries. The effect on FDI in services is statistically and economically significant in both the intensive and extensive margins. On the extensive margin, the probability of a subnational district receiving FDI in services increases by 5.7 percentage points (pp) following the arrival of high-speed Internet connectivity. On the intensive margin, access to high-speed Internet connectivity is associated with a 9.6% and 23.6% increase the number and value of FDI in services. Within the service sector, we find positive and statistically significant effects of Internet connectivity on FDI into the various subsectors, viz, finance, technology, health and retail. The effects of the submarine Internet cables on FDI in other sectors such as manufacturing, energy and construction were not statistically significant.

Second, our findings show that the effects of high-speed Internet connectivity on FDI pertain largely to subnational districts with high access to complementary infrastructure such as electricity and roads. Electricity access, in particularly, plays a key role in amplifying the effect of Internet connectivity in attracting investment. This is largely due to the fact that access to electricity is essential in powering devices such as computers and mobile phones that use the Internet. Thus, the findings from this paper underscore the important role of complementary infrastructure, such as access to electricity and roads, in amplifying the economic impact of Internet services in developing countries.

Finally we provide suggestive evidence on two potential mechanisms: (i) access to highspeed Internet connectivity is associated with improvement in the quality of governance. Access to Internet reduces information friction and enhances reporting and scrutiny, thereby enabling citizens to demand greater accountability from their governments. The improvement in 3