Broadband availability and economic growth

Abstract

PurposeThe purpose of this paper is to provide a model to measure the effect of broadband availability on economic growth in developed OECD countries.Design/methodology/approachThe effect of the broadband availability‐related variables on economic growth is analyzed by using cross‐country panel data for 34 OECD countries over the years 1998‐2009. The robustness of the results by the six econometric estimation approaches is compared. The preferable dynamic panel model with the system of Generalized Method of Moments is selected.FindingsThe access channels per inhabitant and total broadband per inhabitant have improved over time, but vary across the analysed OECD countries. The improved access channels per inhabitant and gross capital growth (investment) play a positive and significant role in the per‐capita gross domestic product (GDP) growth. Labour productivity growth has encouraged economic growth positively. These results are robust independently of the estimation procedure.Research limitations/implicationsThe authors do not find a positive and significant role of the total broadband per inhabitant on the per‐capita GDP growth. These findings and the results for control variables pertaining to trade openness and inward foreign direct investment (FDI) in the growth equation are biased to the estimation procedure.Originality/valueThe conceptual‐empirical value to the research of new connections made using the key elements of economic growth theory with focus on the effect of the broadband availability, main macroeconomic and economic openness variables on economic growth. This is one of the first studies that, in the growth equation, uses different broadband availability‐related variables, which in addition to gross capital growth, government consumption, and inflation in the adjusted augmented growth model are controlled for labour productivity growth, trade openness, and inward FDI.