BROADBAND INTERNET AND ECONOMIC GROWTH: CASE OF OECD COUNTRIES

Abstract

Policy makers ,especially in countries that lags in broadband Internet penetration, are in search for policies to increase the broadband penetration and reduce the digital divide. While there may exist various reasons responsible for the low broadband penetration, little empirical has been done so far to test these possible reasons. In OECD countries, there exists significant variations in the rate of broadband Internet speeds and broadband Internet penetration. While broadband penetration in OECD countries continue to grow, the rate of broadband penetration itself is particularly important for various countries. A general debate over this issue continues and various arguments being discussed against the status of broadband Internet adoption, how critical is the intervention to increase broadband adoption, and the effectiveness of these interventions. In order to become competitive and increase economic growth, a critical barrier for a nation is to develop Internet infrastructure especially broadband. In search of a significant case that could be used to assess the possible factors that contributes to broadband Internet adoption at national level, we find OECD countries important due their comparative advanced levels of broadband Internet deployment and wide variations in the levels of broadband penetration. The purpose of this dissertation is to identify and examine various factors and their significance in broadband uptake in OECD countries, and discuss the role of broadband Internet in the national competitiveness and economic growth. The dissertation also assesses the effectiveness of governmental interventions, on both supply and demand sides, to increase broadband uptake and come up with some recommendations for government role in the process of broadband uptake. This dissertation uses quantitative method approach and applies two research models to assess the significance of various broadband-related environmental factors and governmental interventions. viii A modified Porter’s Diamond model and a conceptual model, based on King et al., (1994) work, were constructed and used. The diamond model used correlation analysis and trend analysis. The conceptual model used panel and OLS regression analysis. Both models assessed significance of various factors, divided into groups, for the broadband adoption at the national level. A critical analysis of previous studies is provided to extend the scope of the role of government in broadband adoption and impact of various factors responsible for broadband adoption at national level. The quantitative analysis of this dissertation provides evidence that various factors affect the availability of broadband Internet. These factors also include governmental intervention factors from both supply and demand side. The analysis of both model also affirms the criticality of household computer penetration, number of Internet users and non-users, firms’ e-commerce turnover, and number of people having tertiary education, electronic government services, and local loop unbundling (LLU) policies in promoting broadband adoption at national level.