 | This empirical study examines the economic impact of fixed and mobile broadband in the least developed countries (LDCs), landlocked developing countries (LLDCs) and small island developing states (SIDS).
These 91 most vulnerable countries have to date been largely neglected in studies of this kind, yet broadband technology offers potential for a step change in their economic and social development. A growing body of evidence indicates that broadband Internet, and information and communication technologies (ICT) in general, promote economic development.
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Given its potential applications in diverse sectors of the economy, investment in this technology is particularly important for vulnerable countries. Failure to ensure high levels of broadband access and use may have significant implications for these countries, with the risk of seeing them fall further behind.
As an enabling technology, broadband creates value and reduces costs by supporting applications in many different sectors such as agriculture, education, financial services, government, health and disaster management. Case studies already show a quantifiable economic impact – for example, fixed and mobile broadband have facilitated e‑commerce in Kazakhstan, which continues to expand, generating additional revenue and employment. In some LDCs, the indirect impact of these technologies is difficult to quantify, but economic and social effects are emerging, particularly in relation to improvements in the quality of education. For example, in Ethiopia and Zambia, e-education initiatives supported by broadband technologies are expanding opportunities for learning at the vitally important primary school stage and for tertiary study. Ultimately, broadband is expected to have a positive impact on GDP per capita, since student achievement and skills are strong predictors for their future socio-economic status.
Using a cross-sectional time-series analysis, this study explores the economic impact of broadband in LDCs, LLDCs and SIDS over the period 2000 to 2017. Its findings confirm that both fixed and mobile broadband have a positive economic impact in these countries. Mobile broadband appears to exert a slightly stronger impact than fixed broadband, generating a 2.5 to 2.8 per cent increase in GDP per capita per 10 per cent increase in penetration, compared to a 2.0 per cent to 2.3 per cent increase for fixed broadband. However, as the difference is not statistically significant it is not possible to conclude that mobile delivers a superior outcome to fixed broadband.
For both fixed and mobile technologies, the analysis finds that GDP per capita is related to broadband penetration, indicating an increase in economic impact as broadband penetration increases. Threshold effects were evident for mobile broadband at a level of at least 30 mobile broadband subscriptions per 100 inhabitants. In the case of fixed broadband, low levels of penetration in almost all of the sample countries mean that threshold effects are more difficult to identify.
From a comparison of these results with other empirical studies (see figure below), it appears that the economic impact of both fixed and mobile broadband is greater in low-income countries than in other, higher-income countries. This indicates that a policy of increased or further investment in improving broadband access, connectivity and uptake in LDCs, LLDCs and SIDS could yield higher economic returns than in other countries.
