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Broadband Infrastructure and Economic Growth

Authors/Editors: Czernich, N.
Falck, O.
Kretschmer, T.
Wößmann, L.
Published: 2011
Type: Articles in Refereed Journals (International)
ISBN/ISSN: 0013-0133
Published by: The Economic Journal
: 121(5), pp. 505-532


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.