info_docs_tfgrid4_tech/docs/main/internet_today/gdp_negative.md

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GDP Negative	5

Internet is GDP Negative

The concept of "Internet GDP negative" in this context highlights the economic disadvantages countries face when relying heavily on the centralized as located in wealthier nations.

A feasibility study done for Tanzania shows a yearly lost of 10 Billion USD per year.

1. Loss of Revenue from Booking Sites

• Platforms like global booking and e-commerce websites often charge high commission fees, which results in local businesses losing a significant portion of their revenue.
• Impact: Instead of money circulating within the local economy, it is extracted and transferred to the countries where these platforms are headquartered.
  • For a small country like Zanzibar the impact of centralized booking sites means a loss of 200m USD per year.

2. Loss of Advertising and Marketing Dollars

• Companies within countries purchase online advertisements primarily on platforms like Google, Facebook, and others. These platforms are headquartered in a handful of nations, meaning most of the advertising revenue flows out.
• Impact: Local businesses indirectly fund foreign economies instead of building up domestic digital marketing ecosystems.

3. Data Dependency

• User data from most countries is stored and processed in foreign data centers. This creates dependency on a few nations for internet services and data storage.
• Impact: The local economy loses the opportunity to benefit from data-driven industries (e.g., AI, analytics). Furthermore, countries become vulnerable to foreign policy changes, data access restrictions, or breaches.

4. Loss of Sovereignty and Influence

• When internet infrastructure and critical data storage are external, nations lose control over how their citizens’ data is managed and utilized.
• Impact: This reduces the ability to enforce regulations, build influence, or compete globally in the digital space.

5. Infrastructure Costs and Dependency

• Sea cables and external server access are essential for internet connectivity, but these are often controlled by a few companies or nations.
• Impact: Developing countries pay disproportionately for infrastructure access and maintenance without gaining ownership or influence over it.

6. Economic Leakage

• Payments for cloud services, digital tools, and other online services are made to companies based overseas.
• Impact: Funds that could be used to build local internet ecosystems instead boost the economies of tech giants.

7. Inability to Drive Local Innovation

• Centralized control of data and reliance on external internet infrastructure limit opportunities for local startups to thrive.
• Impact: Countries lose out on developing their digital economies and creating jobs in the tech industry.

8. Digital Divide

• Developing nations often pay more for connectivity while receiving slower or less reliable services compared to developed nations.
• Impact: This perpetuates inequality in access to opportunities, education, and innovation.

These factors combined mean that many nations are effectively "Internet GDP negative"—paying more into the global internet economy than they gain.