Economic Benefits of New Broadband Network Coverage and Service Adoption: Evidence from OECD Member States

A broad-scale rollout and adoption of new broadband networks and services, respectively, are expected to generate innovative services for consumers and create a high potential for productivity increases and economic growth. However, there is no evidence available on the causal impact of both broadband coverage and adoption on economic outcomes, which we measure as gross domestic product (GDP). Moreover, no study has yet simultaneously considered the impact of both new wireline broadband based on fiber-optic technologies and wireless (mobile) broadband based on 3G+/4G technologies. Distinguishing these effects is of crucial relevance for the efficient design of broadband policies. To provide reliable evidence on causal effects, we utilize comprehensive panel data for 32 OECD countries for the years 2002–2020 and panel fixed-effects estimators including instrumental variables estimation. Our results show that both fixed and mobile broadband adoption exert a substantial and significant impact on GDP, while network deployment per se exhibits only minor multiplier-related effects on GDP per capita. Contemporaneous effects of a 1% increase in fixed broadband adoption impact GDP per capita growth in a range of 0.026% to 0.034%, while a 1% increase in mobile broadband adoption contributes between 0.092% and 0.102%. While the impact of contemporaneous mobile broadband adoption is substantially higher, fixed broadband adoption shows stronger dynamic and cumulative effects, as well as larger effects in later deployment periods. Generally, our results are consistent with the notion that the adoption of technologies to substantial proportions of the population is most important in driving economic growth.