The Impact of Broadband Networks on Growth and Development in South America

Abstract

Broadband networks can play a special role as "general purpose technologies" that enable or facilitate the use of other Information and Communication Technologies (ICTs), including a plethora of internet-based services, such as e-commerce, e-government, e-learning or social media. Due to the better quality and availability of statistical data, most empirical studies on the economic effects of broadband have focused on their impact on growth, employment and productivity in developed countries. In this study, we set out the reasons why these economic effects should also be relevant for developing countries and examine the potential advantages of increasing broadband take-up. To analyze the significance of broadband for economic development, we specify and estimate an econometric model for nine South American countries, for which relatively high quality data was available. According to our results, increased broadband penetration is associated with significant "spillover" effects, excess societal returns over and above the expected returns of other investments in physical capital.