39 Pages Posted: 3 Dec 2009
Date Written: December 2009
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.
Keywords: broadband, high-speed internet, technology diffusion, economic growth
JEL Classification: O47, L96, K23
Suggested Citation: Suggested Citation
Czernich, Nina and Falck, Oliver and Kretschmer, Tobias and Woessmann, Ludger, Broadband Infrastructure and Economic Growth (December 2009). CESifo Working Paper Series No. 2861. Available at SSRN: https://ssrn.com/abstract=1516232