Abstract:
In this paper we investigate the effects of broadband infrastructure providing high speed internet, on economic growth in developing countries. We have used two different broadband measures to classify developing countries into two groups for the period 1999-2008. By using logistic diffusion model and IV approach, a nonlinear diffusion model is specified. Differences in ceiling of diffusion curve of this technology across countries are defined by pre-existing telephone networks. Then, after predicting broadband penetration rates through the diffusion curve and controlling for fixed effects, the effects of introduction and distribution of broadband on economic growth are estimated. The results indicate that these effects are significant and positive.
Machine summary:
"This paper investigates the effect of broadband infrastructure on economic growth, using an annual panel of 46 developing countries with some similarities at their ICT status (info-density and info-use of communication and information technology and consequently digital divide), during 1999-2008 period with first introduction of broadband at 2000.
Koutroumpis (2009) applied an adoption of Roller & Waverman model, but he concentrated on broadband instead of telephone network, by using a group of 22 OECD countries over 2002-2007, he indicated that there is a positive and significant relationship, specially, when a critical mass of infrastructure is reached.
Broadband diffusion in group B countries: Actual curves 1 Fitted values 8 6 4 2 0 1998 2000 2002 2004 2006 2008 Year Albania/Moldova/Vietnam Algeria/Mongolia Belize/Morocco Brazil/Panama Bulgaria/Paraguay China/Philippines Colombia/Romania Costa Rica/Russian Federation Ecuador/Saudi Arabia El Salvador/Thailand Georgia/Trinidad and Tobago Jamaica/Tunisia Jordan/Turkey Malaysia/Ukraine Mexico/Venezuela, RB Figure 4.
For example, one study by Roller and Waverman (2001), was performed for 21 OECD countries with average penetration rate of 30 percent to assess the effect of telecommunication infrastructure on economic growth and its results indicated the existence of critical mass at a penetration rate of approximately 24%.
Another study by Koutroumpis (2009) investigated broadband penetration effect on the economic growth of 22 OECD countries and concluded that there is a positive and significant causal relationship especially when a critical mass of infrastructure in the 30% threshold of broadband penetration rate is present."