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Measuring (in a time of crisis) the impact of broadband connections on economic growth: an OECD panel analysis

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  • Angelo Castaldo
  • Alessandro Fiorini
  • Bernardo Maggi

Abstract

Technological innovation has always been considered a major stimulus for economic growth. High-speed internet access via broadband infrastructure has undergone rapid development since the end of the 1990s, thanks to the deployment of both fixed and mobile technologies. The present study investigates the impact of fixed broadband diffusion as a technological determinant of economic growth on the basis of a panel of 23 OECD countries over 15 years (1996–2010). The time horizon chosen is suitable for verification of the causal effect on growth of the transition from traditional copper to partially fibre networks. Through implementation of a dynamic panel by using the generalized method of moments (GMM) combined with an instrumental variable (IV) two-stage approach, we found a positive correlation between broadband diffusion and economic growth, even after controlling for countries initial endowment of information and communication technologies (ICT) and for the years of economic crisis. Our main finding provides evidence, through a continuous time interpretation of our estimations, of a quantitatively relevant relationship between broadband diffusion and economic dynamics in the short, medium and long runs. Our findings may be useful to policy makers in that they permit forecasting of the benefits of further transition from broadband to ultra-wide broadband networks.

Suggested Citation

  • Angelo Castaldo & Alessandro Fiorini & Bernardo Maggi, 2018. "Measuring (in a time of crisis) the impact of broadband connections on economic growth: an OECD panel analysis," Applied Economics, Taylor & Francis Journals, vol. 50(8), pages 838-854, February.
  • Handle: RePEc:taf:applec:v:50:y:2018:i:8:p:838-854
    DOI: 10.1080/00036846.2017.1343448
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    2. Abdulqadir, Idris A. & Asongu, Simplice A., 2022. "The asymmetric effect of internet access on economic growth in sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 44-61.
    3. Stefano Magrini & Alessandro Spiganti, 2024. "A tale of two cities: Communication, innovation, and divergence," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 390-413, January.
    4. José Laurindo de Almeida & Helder Ferreira de Mendonça, 2019. "The effect of infrastructure and taxation on economic growth: new empirical assessment," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(5), pages 1065-1082, August.
    5. Stefano Magrini & Alessandro Spiganti, 2021. "The Day After Covid-19: Implications for Growth, Specialization, and Inequality," Working Papers 2021:13, Department of Economics, University of Venice "Ca' Foscari".
    6. Jung, Juan & López-Bazo, Enrique, 2020. "On the regional impact of broadband on productivity: The case of Brazil," Telecommunications Policy, Elsevier, vol. 44(1).
    7. Abdulqadir, Idris & Asongu, Simplice, 2021. "The asymmetric effect of internet access on economic growth in sub-Saharan Africa: Insight from a dynamic panel threshold regression," MPRA Paper 109904, University Library of Munich, Germany.
    8. Hong, Junjie & Shi, Fangyuan & Zheng, Yuhan, 2023. "Does network infrastructure construction reduce energy intensity? Based on the “Broadband China” strategy," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    9. Chirok Han & Hyoungjong Kim, 2023. "Heteroskedasticity‐Robust Standard Errors for Dynamic Panel Data Models with Fixed Effects," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 85(5), pages 1135-1155, October.
    10. 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.
    11. Pantelis Koutroumpis & Danai Sarri, 2024. "The economic impact of broadband access for small firms," The World Economy, Wiley Blackwell, vol. 47(4), pages 1642-1681, April.
    12. Martina Aronica & Rubinia Celeste Bonfanti & Davide Piacentino, 2021. "Social media adoption in Italian firms. Opportunities and challenges for lagging regions," Papers in Regional Science, Wiley Blackwell, vol. 100(4), pages 959-978, August.
    13. Tanja Broz & Goran Buturac & Miloš Parežanin, 2020. "Digital transformation and economic cooperation: The case of Western Balkan countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(2), pages 697-722.
    14. Martha Jiménez García, 2019. "The Impact of Information and Communication Technologies on Economic Growth in Mexico," International Journal of Business and Social Research, LAR Center Press, vol. 9(2), pages 11-22, February.
    15. Yu Wang & Bindong Sun & Sixu Wu & Wan Li & Tinglin Zhang, 2021. "Can the internet reshape the national city size distribution? Cross‐country evidence," Papers in Regional Science, Wiley Blackwell, vol. 100(5), pages 1254-1272, October.
    16. Gómez-Barroso, José Luis & Marbán-Flores, Raquel, 2020. "Telecommunications and economic development – The 21st century: Making the evidence stronger," Telecommunications Policy, Elsevier, vol. 44(2).
    17. Roberta Arbolino & Raffaele Boffardi & Luisa De Simone, 2019. "Which are the Factors Influencing Innovation Performances? Evidence from Italian Cohesion Policy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 146(1), pages 221-247, November.

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    More about this item

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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