Broadband Infrastructure and Economic Growth

28 Pages Posted: 20 May 2011

See all articles by Nina Czernich

Nina Czernich

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation

Oliver Falck

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

Ludger Woessmann

Ifo Institute for Economic Research; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); University of Munich - Ifo Institute for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: May 2011

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 raised annual per capita growth by 0.91.5 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.

Suggested Citation

Czernich, Nina and Falck, Oliver and Kretschmer, Tobias and Woessmann, Ludger, Broadband Infrastructure and Economic Growth (May 2011). The Economic Journal, Vol. 121, Issue 552, pp. 505-532, 2011. Available at SSRN: https://ssrn.com/abstract=1840209 or http://dx.doi.org/10.1111/j.1468-0297.2011.02420.x

Nina Czernich (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation ( email )

Poschingerstr. 5
Munich, 81679
Germany

Oliver Falck

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation ( email )

Poschingerstr. 5
Munich, 81679
Germany

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Ludger Woessmann

Ifo Institute for Economic Research ( email )

Poschingerstr. 5
Munich
Germany
++49 89 9224 1699 (Phone)
++49 89 9224 1460 (Fax)

HOME PAGE: http://www.cesifo.de/link/woessmann_l.htm

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

University of Munich - Ifo Institute for Economic Research

Schackstr. 4
Munich, 80539
Germany

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