Broadband and economic growth: a re-assessment

AuthorsGary Madden, Walter J. Mayer, Chen Wu
PublishedJanuary 2016
Number of Pages27

This study questions whether broadband network penetration a robust determinant of economic growth. For our preferred dynamic specification, penetration is statistically insignificant with speed (positively) and its interaction with penetration (negatively) impacting on growth. The negatively signed interaction term suggests increased speed is more important for countries with lower penetrations. In fact, the growth impact is significant only for six low-income countries with the lowest penetrations. Additionally, the economic returns are short-term in incidence. For a generic shock experienced by low-income countries, 40% of the total impact is immediate, with 80% occurring within 4 quarters. This empirical analysis is both timely and important as governments are in the process of allocating scarce resources to ambitious and costly broadband network infrastructure targets.