The effects of Broadband spread on growth in GDP

Abstract: This paper investigates whether there is a correlation between broadband use and econom-ic growth by using an endogenous growth model along with previous studies of broadband use and theories for its spread an equation was developed accordingly. The estimation was done using data from the World Bank and ITU for the years 2002-2008, with minor imbalance in the dataset. Moreover, the estimation was done using two-way fixed effects and heteroskedasticity and autocorrelation robust errors, given tests for heteroskedasticity and autocorrelation in the regressions. The result from the regressions showed that broadband spread has a significant effect on GDP growth, while the signifi-cance of the coefficients for human capital do vary with education stage. In the analysis of the subject it was also shown that there are more underlying matters to be dealt with to give a fair estimation and conclusion, such as the difference between markets and difference in speed of broadband which may could have given slightly different results. Also that the range of time for broadband is relatively short, a longer range could have giv-en a better estimate. Furthermore, the analysis shone light on that there are both weakness-es by spread of broadband as exacerbation of poverty and strengths as possibility to savings in healthcare and increase spread of education via broadband. In addition to this there is possibly reversed causality and the fact that all ICT technology are general purpose tech-nologies has the impact that one should see the results with somewhat scepticism. In conclusion, the positive effect from broadband spread on economic growth is stated-with an addition, that more data and taking account of broadband differences globally would be needed in a future research to fully establish the effect, as well as mentioned limi-tations to result should be taken into account.