Broadband Infrastructure and Economic Growth
Nina CzernichIfo Institute for Economic Research at the University of MunichOliver FalckIfo Institute for Economic Research at the University of Munich and CESifoTobias KretschmerInstitute for Strategy, Technology and Organization at the University of Munich and Ifo Institute for Economic Research, CEPLudger WoessmannUniversity of Munich and Ifo Institute for Economic Research, CESifo and IZA
2011en
ABI
Abstract
We estimate the effect of broadband infrastructure, which enables high-speed internet, on economic growth in the panel of OECD countries in 1996-2007. Our instrumental-variable model derives its non-linear first stage from a logistic diffusion model where pre-existing voice-telephony and cable-TV networks predict maximum broadband penetration. We find that a 10 percentage-point increase in broadband penetration raises annual per-capita growth by 0.9-1.5 percentage points. Results are robust to country and year fixed effects and controlling for linear second-stage effects of our instruments. We verify that our instruments predict broadband penetration but not diffusion of contemporaneous technologies like mobile telephony and computers.
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