size of FDI receipts by 10.5% (column 4) and 33.4% (column 6) respectively.<sup>25</sup> Which sectors are the impact of Internet connectivity on FDI concentrated? The results in columns 7-12 show a positive impact of Internet connectivity on FDI into services. The probability of receiving FDI in the services sector increases by 5.7 pp, while the number and size of FDI receipts in services increase by 9.6% (column 10) and 23.6% (column 12) respectively following the arrival of highspeed Internet. In terms of FDI in manufacturing, we do not find any statistically significant effect of high-speed Internet connectivity, albeit the estimates are positive and relatively sizeable. Similarly, we do not find any consistent evidence of an impact of Internet connectivity on FDI in the energy and real estate (sub)sectors. Overall, the results herein suggest that while access to fast Internet is associated with an increase in FDI receipts, the effect is mainly concentrated in FDI in service-related activities. This falls in line with our a priori expectations that Internet-dependent sectors, like services, are plausibly the most likely direct beneficiaries of investments induced by high-speed Internet connectivity.

To further understand the Internet-FDI nexus, we drill deeper into the service(s) sector to explore the effects of Internet connectivity on FDI in the various subsectors, namely, financial services, technology services, and others (health and retail). In Table 3 (column 7-12), we find that access to high-speed Internet leads to an increase in FDI in financial services: the probability of receiving FDI into the subsector increases by 5.7 pp, while the number and size of the investments into the subsector increases by 6.2% (column 10) and 20.4% (column 12) respectively. FDI into technology services also improves with connectivity to high-speed Internet. The probability of receiving FDI in technology services increases by 2.7 pp (column 14), while the number of FDI projects in technology services increases by 3.4% (column 16). The effect on the size of FDI into technology services is also positive and significant (column 17) albeit it loses significance once we control for district level characteristics interacted with time trends (column 18). We also find positive effects on FDI in other service subsectors (including health and retail). These effects are statistically and economically meaningful. The probability of receiving FDI increases by 2 pp (column 20), while the number and size of FDI in the subsector increase by 4.1% (column 22) and 11.5% (column 24) respectively. Taken together, the main finding from the results is that high-speed Internet connectivity increases FDI, although the effect is mainly concentrated in the services sector (e.g., finance, technology, retail, and health).

Aside the overall positive average effect of Internet connectivity on FDI, how does the effect vary over time? This is important for at least two reasons: (i) dynamic estimates from an event-study analysis allow us to provide an assessment of the "parallel trends" assumption– a

> ˆ 25In a IHS-linear model, this effect is given as _≈_ exp( ˆ _β−_ 0.5 _V ar_ �( _β_<sup>ˆ</sup> )) _−_ 1, where _V ar_<sup>�</sup> ( _β_<sup>ˆ</sup> ) is the estimated variance of _β_ (Bellemare and Wichman, 2020). Hence, in column 4, the estimate corresponds to exp(0.1005 _−_ 0.5(0.0334)<sup>2</sup> ) _−_ 1 _=_ 0.105

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