Internet Restrictions Impact Economy
The vice president of a leading United States technology think-tank, Daniel Castro, said on Thursday that internet restrictions in Pakistan might provide short-term political power but can cause long-term economic instability due to significant costs associated with these shutdowns.
Concerns Over Internet Restrictions
Castro called the internet restrictions in Pakistan a “puzzle” and “an anomaly” in the middle of the digitalization drive, which also carries huge economic costs, including the risks of its citizens and businesses leaving Pakistan. Castro, the vice president of the Information Technology and Innovation Foundation (ITIF), spoke to a select group of journalists during a conversation organized by the United States Embassy in Pakistan. The US’s logistic support for the talk underscores the importance that it now attaches to internet freedom in Pakistan.
Weighing Short-term vs Long-term Interests
“We recognize country sovereignty. But what countries have to decide is basically what their goal is going to be and whether are they putting short-term interests ahead of long-term interests. Most of the arguments for shutdowns are that it is good for political stability or maybe political power in the short term. And my argument would be that economic stability that you would get from not having shutdowns outweighs any short-term benefits,” said Castro.
He said there have to be certain red lines. Just like you wouldn’t want to shut down all the rooms or all the ports of entry if there was some kind of harmful content coming in or harmful products coming in.
Puzzle of a Leading Digital Economy
Castro’s remarks came against the background of internet censorship in Pakistan, including the banning of X, formerly Twitter, and rolling out social media firewalls aimed at disrupting and controlling normal access to different social media platforms. Castro said one of the reasons he got very interested in what was happening right now with Pakistan and some of the internet shutdowns is because he thought there was “this puzzle in the sense that Pakistan is a leading digital economy”.
Impact on Women and Small Businesses
There are also concerns about the adverse implications of internet censorship on women—who make up half of Pakistan’s population—and are facing restrictions and adverse impacts on their small businesses. “When someone takes down Twitter, it significantly impacts her source of revenue by affecting where she gets her clients. Therefore, I think some people often overlook that part of the message and say, “Well, we are not shutting down the Internet.” He said Twitter is a commercial activity and that has a huge impact as well.
Economic and Trade Implications
Castro argued that most countries leading digital economies are considering how to build more digital infrastructure and are trying to ensure that people stay connected. “It is almost this anomaly here to see a more advanced digital economy doing that attack basically to itself, taking people offline. The reason it is such an anomaly is because we know that internet shutdowns, whether it’s hours, minutes and days, are impacting specific services and have a significant economic cost,” he added.Â
He said there have been numerous studies that show that connectivity, broadband, and wireless connectivity lead to economic growth, lead to improvements in terms of trade, and lead to higher wages and better-paying jobs. He argued that trade and digital services are one of Pakistan’s leading areas. Castro said his interactions with Pakistanis suggested that the internet restrictions were impacting freelancers and online workers in Pakistan.
Challenges Faced by Freelancers
Freelancers can receive global rates, but “the problem is you cannot receive those global rates if you cannot join your Zoom meeting.”He said that when someone cannot deliver to the client because they get kicked offline or experience slow Internet connections due to shutdowns, it does not necessarily cut them off entirely but instead slows their speed down.
Concerns Among Students
Castro said during his interaction with students of the universities in Lahore, it emerged that they were worried about the impact of internet restrictions. “They have to ask, where do I go next? Do I stay in Pakistan and help build the next generation of products and services, future startups that can scale and deliver massive value or do I leave the country because I can’t do this here because of various barriers that might hold it back?”
Talent and Investment Concerns
Castro said people in Pakistan recognize that artificial intelligence is going to have a massive impact on the economy and society, and companies are trying to scale up quickly. These companies are looking for talent and talent hubs. He said some global companies are turning away from Europe due to regulatory policy issues. “These companies are looking at the rest of the world and other places to invest, things like not having connectivity, that’s a factor that will impact where they invest, and that could have just a tremendous impact in terms of if Pakistan wins as this could be a hub of AI innovation for some of these multinationals, or it could not be, and some of these policies I think have these big impacts.”
Social Media’s Role in Business
He said social media platforms like WhatsApp, Facebook, Twitter and YouTube are not just for entertainment or socialization, they are core parts of many businesses, especially small enterprises.
Economic Cost of Restrictions
To a question about the exact economic impact of internet restrictions in Pakistan, Castro said he did not have a specific number on the economic cost, but “usually it’s millions of dollars per day of economic activity that’s lost when you’re talking about wholesale on the internet.” He said the impact is significant because we do know that most users spend a significant amount of time on social media, and X is a major social media platform.
Direct and Indirect Effects
Castro said there are direct and indirect effects, which are harder to quantify but often might be even larger than the direct effects. So the indirect effects are things like a decision not to invest in a particular country because of the concerns about the shutdowns. There is also an economic impact on account of the amount of Virtual Private Network (VPN) subscriptions, which has shot up. “When someone’s willing to spend $100 or $20 a month or however much they’re spending, that shows that whatever value they’re getting out is higher than that. So whoever’s being blocked, that’s how much loss they’re showing up there for them,” he added.
Summary Explanation
In summary, Daniel Castro highlighted the economic and social costs of internet restrictions in Pakistan. While these shutdowns may offer short-term political gains, they threaten long-term economic stability. Castro emphasized that internet restrictions impede digital growth, negatively affect businesses and freelancers, and deter international investments. The impact is particularly severe on women and small businesses that rely heavily on digital platforms. He urged that the focus should be on building robust digital infrastructure and maintaining connectivity to ensure sustainable economic development.
