Broadband penetration and economic growth in ASEAN countries: a generalized method of moments approach

Abstract

Broadband infrastructure has numerous economic potentials. This study examines the impact of broadband penetration on economic growth in the panel of 10 countries of the Association of Southeast Asian Nations (ASEAN) from 1998 to 2011. Based on the pooled Ordinary Least Squares (OLS), fixed effects and random effects estimates, we found that broadband deployment has a positive relationship with economic growth. In addition, we used the Generalized Method of Moments (GMM) dynamic panel data model to address the reverse causality and potential endogeneity issues in this study. The result also reveals that broadband penetration appears to be a key factor in the explanation of Gross Domestic Product growth. The finding remains robust even after the control for Information and Communication Technology (ICT) goods imports. This result in turn suggests that the utilization of broadband infrastructure and application is expected to enhance the national aggregate outputs.