The economic impact of broadband: Evidence from OECD countries

Abstract

Information networks have a significant impact on modern economies. This is reflected by their adoption and use across countries along with the increasing quality of the networks. As a result, the impacts on the economy are driven both by the level of adoption and the quality of the connections. Looking at the OECD countries between 2002 and 2016, I find a consistent effect of broadband adoption on national economic output with diminishing returns to scale. I also find that speed is a moderator of these effects and identify a speed threshold, beyond which further quality increases are deemed unproductive. This speed-threshold increases over time as more applications and skills become available. The measurement of adoption levels and speeds helps formulate a policy tool that guides the development of new communications networks. It also shapes the key priorities in terms of their coverage and quality trade-offs.