Broadband Impact on Economic Growth: A Review of the Empirical Evidence

This paper reviews the empirical studies on the economic impact of Information and Communication Technologies (ICTs) on economic growth. The review shows that investments in ICTs have significant impact on economic growth. However, these effects are fully displayed only when investments in ICTs are associated with investments in complementary assets such as companies re-engineering, e-government programs (organizational capital) and ICTs skills (human capital). The paper emphasizes the role of broadband as an enabling technology due to its nature of General Purpose Technology. Furthermore, the literature review presents in details the major studies on the impact of broadband on economic growth and shows that the diffusion of broadband can have significant payoffs in terms of increasing productivity. However, these effects are not universal but depend on the level of development of the "ICTecosystem" of each country. While in the past too much policy making in many countries has concentrated on the supply side of the broadband market, the paper stresses the importance of adequately recognise the role of the demand side, especially for countries like Italy. Finally, the paper shows that the investments in ICTs have higher social returns than those in other infrastructures especially for the externality effects characterizing the broadband networks.