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Broadband and economic growth
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3rd April 2010
Investment in broadband capacity and speed has a strong impact on economic growth according to new research.
A paper presented to the RES annual conference by Nina Czernich from the Institute for Economic Research at the University of Munich finds that a 10 percentage point growth in broadband penetration can raise annual economic growth per person by up to 1.5 percentage points. The authors describe broadband internet as a ‘general purpose technology’, which changes how and where economic activity is organised. It supports new business models, allowing information to be shared more quickly and stored more efficiently. This can lead to lower start-up costs for new companies, greater competition, increased labour productivity and ultimately stronger economic growth.
The US White House clearly believes this too: Growth, Prosperity, Broadband (March 2010). This BBC news article provides more background on the US plan: Broadband plan for high speed internet sent to Congress The Federal Communications Commission (FCC) wants to make the US a world leader in high-speed internet access to improve commerce and productivity.