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Effectiveness and efficiency of state aid for new broadband networks: Evidence from OECD member states

Author

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  • Wolfgang Briglauer

    (Vienna University of Economics and Business (WU))

  • Michał Grajek

    (ESMT European School of Management and Technology)

Abstract

The deployment of new broadband networks (NBNs) based on fiber-optic transmission technologies promises high gains in terms of productivity and economic growth, and has attracted subsidies worth billions from governments around the world in the form of various state aid programs. Yet, the effectiveness and the efficiency of such programs remains largely unstudied. We employ panel data from 32 OECD countries during 2002-2019 to provide robust empirical evidence of both. We find that state aid significantly increases NBNs by facilitating the deployment of new connections to 22% of households in the short term and 39.2% in the long term. By comparing the actual amounts of state aid support to the estimated impact on GDP growth, we also find it to be highly cost efficient, as the programs break even after three years on average.

Suggested Citation

  • Wolfgang Briglauer & Michał Grajek, 2021. "Effectiveness and efficiency of state aid for new broadband networks: Evidence from OECD member states," ESMT Research Working Papers ESMT-21-01, ESMT European School of Management and Technology.
    • Handle: RePEc:esm:wpaper:esmt-21-01
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    References listed on IDEAS

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    Cited by:

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    2. Karlilar, Selin & Balcilar, Mehmet & Emir, Firat, 2023. "Environmental sustainability in the OECD: The power of digitalization, green innovation, renewable energy and financial development," Telecommunications Policy, Elsevier, vol. 47(6).
    3. Marc Bourreau & Lukasz Grzybowski & Ángela Muñoz-Acevedo, 2023. "The Efficiency of State Aid for the Deployment of High-Speed Broadband: Evidence from the French Markets," CESifo Working Paper Series 10440, CESifo.

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    More about this item

    Keywords

    Fiber optic technology; state aid; ex-post evaluation; efficiency; OECD countries;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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