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Broadband and economic growth: a reassessment

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  • Walter Mayer
  • Gary Madden
  • Chen Wu

Abstract

The principal question addressed by this study is: is broadband network penetration a robust determinant of economic growth? We employ a dynamic panel data threshold model with fixed effects to allow for variation in the parameters by income groups to investigate the impact of broadband speed and its interaction with penetration on growth. We find that penetration is statistically insignificant with speed (positively) and its interaction with penetration (negatively) significantly impacting on growth. An additional insight is that for a generic shock experienced by LIC, on average, 40% of the total impact is accomplished immediately, with about 80% occurring within four quarters. The results are intended to inform governments that increased speed is more important for countries with lower penetation, the returns expected from these ambitious targets are neither immediate nor universally assured; and critically the magnitude of the benefit relies on the initial level of national economic development.

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  • Walter Mayer & Gary Madden & Chen Wu, 2020. "Broadband and economic growth: a reassessment," Information Technology for Development, Taylor & Francis Journals, vol. 26(1), pages 128-145, January.
    • Handle: RePEc:taf:titdxx:v:26:y:2020:i:1:p:128-145
    DOI: 10.1080/02681102.2019.1586631
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    Cited by:

    1. Vujica Lazović & Milorad Jovović & Tamara Backović & Tamara Djuričković & Biljana Rondović, 2022. "Is Digital Economy a Good Samaritan to Developing Countries?," Sustainability, MDPI, vol. 14(14), pages 1-22, July.
    2. José Santiago Gómez Medina, 2021. "Efecto de la banda ancha sobre el valor agregado en los municipios de Colombia," Documentos CEDE 19559, Universidad de los Andes, Facultad de Economía, CEDE.
    3. Charles Shaaba Saba & Oladipo Olalekan David, 2023. "Identifying Convergence in Telecommunication Infrastructures and the Dynamics of Their Influencing Factors Across Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1413-1466, June.
    4. Leogrande, Angelo & Magaletti, Nicola & Cosoli, Gabriele & Massaro, Alessandro, 2022. "Broadband Price Index in Europe," MPRA Paper 112243, University Library of Munich, Germany.
    5. Alexandra-Nicoleta Ciucu (Durnoi) & Cosmin Alexandru Teodorescu & Vanesa Madalina Vargas & Corina Ioanas, 2023. "Analysing EU Countries Digital Progress Towards Sustainable Development Goals," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(S17), pages 987-987, November.
    6. Smedoiu Popoviciu Alexandra & Horobet Alexandra & Belascu Lucian, 2021. "Taxing the digital economy – rethinking Romania’s prospects," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 15(1), pages 338-351, December.
    7. Shunbin Zhong & Mengding Li & Yihui Liu & Yun Bai, 2023. "Do Internet Development and Urbanization Foster Regional Economic Growth: Evidence from China’s Yangtze River Economic Belt," Sustainability, MDPI, vol. 15(12), pages 1-14, June.
    8. Li, Yutao & Zhang, Jinning & Lyu, Yanwei, 2023. "Does telecommunications infrastructure promote entrepreneurship in developing countries? Evidence from a quasi-natural experiment in China," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 106-119.
    9. Mounir Dahmani & Mohamed Mabrouki & Adel Ben Youssef, 2022. "ICT, trade openness and economic growth in Tunisia: what is going wrong?," Economic Change and Restructuring, Springer, vol. 55(4), pages 2317-2336, November.
    10. Teklemariam, Mekuria Haile & Kwon, Youngsun, 2020. "Differentiating mobile broadband policies across diffusion stages: A panel data analysis," Telecommunications Policy, Elsevier, vol. 44(8).
    11. de Clercq, Michaël & D'Haese, Marijke & Buysse, Jeroen, 2023. "Economic growth and broadband access: The European urban-rural digital divide," Telecommunications Policy, Elsevier, vol. 47(6).
    12. Briglauer, Wolfgang & Dürr, Niklas & Gugler, Klaus, 2021. "A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties," International Journal of Industrial Organization, Elsevier, vol. 74(C).
    13. Fernández-Portillo, Antonio & Almodóvar-González, Manuel & Hernández-Mogollón, Ricardo, 2020. "Impact of ICT development on economic growth. A study of OECD European union countries," Technology in Society, Elsevier, vol. 63(C).

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