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How important is mobile broadband latency for total factor productivity growth?

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  • Edquist, Harald

Abstract

This paper investigates the relationship between the log change in mobile broadband latency and total factor productivity (TFP) growth based on data for 130 countries. It finds that there is a strong correlation between TFP growth and one year lag of latency growth once controlling for the growth of labor and capital services in OECD countries. The interpretation of the findings is that a 10 percentage points decrease in the growth of latency in period t-1 is associated with an increase of 0.3 percentage points in TFP growth. The findings are in accordance with the framework of general purpose technologies that suggests that the impact of new technologies often appear with a lag. Moreover, no relationship is found for non-OECD countries, which suggest that it is only OECD countries that are able to take advantage of the benefits of lower latency. One possible explanation could be that OECD countries have reached a higher maturity in digitalization and automation in production processes and thus are able to take advantage of the benefits of lower latency.

Suggested Citation

  • Edquist, Harald, 2023. "How important is mobile broadband latency for total factor productivity growth?," 32nd European Regional ITS Conference, Madrid 2023: Realising the digital decade in the European Union – Easier said than done? 277954, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itse23:277954
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    File URL: https://www.econstor.eu/bitstream/10419/277954/1/Edquist.pdf
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    References listed on IDEAS

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    1. Harald Edquist & Magnus Henrekson, 2006. "Technological Breakthroughs and Productivity Growth," Research in Economic History, in: Research in Economic History, pages 1-53, Emerald Group Publishing Limited.
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    More about this item

    Keywords

    ICT; Productivity; Latency; Mobile broadband networks; Economic development;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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