Increasing Broadband Internet Penetration
In the OIC Member Countries
24
Figure 6: OECD: Percentage of impact of broadband on GDP growth
Source: adopted from Koutrompis (2009)The “return to scale” effect was also confirmed in a later research conducted by Katz et al.
(2010) for Germany. The estimate was based on a statistical analysis of the impact of
broadband on economic growth of German counties (landkreisse) between 2000 and 2006.
The authors determined that, on average, a 1% increase in broadband penetration contributes
0.0255% to GDP growth. This result coincides with Koutroumpis’ estimate of 0.023 for high
fixed broadband penetration countries. At the same time, by dividing the data set between
counties with high and low broadband penetration, the authors validated the existence of a
return to scale. For counties with an average fixed broadband penetration of 24.8%, the
contribution to GDP growth was around 0.0238%, while for those with an average penetration
of 31%, broadband contributed 0.0256% to GDP.
The return to scale effect has also been found in countries with low levels of broadband
development. Katz & Callorda (2016) were able to model the impact of mobile broadband on
growth of the GDP of Senegal for the period 2009-2014, replicating research conducted by
Katz & Koutroumpis (2014) for 2009-2012 and 2009-2010. During each period, mobile
broadband penetration increased from 0.29% of total population (2010) to 3.42% (2012), and
finally 10% (2014). While in the first period, mobile broadband did not have any impact on
GDP growth, in the second one, each 10% in mobile broadband penetration yielded 0.22% in
GDP growth. In the third period, when mobile broadband penetration reached 10%, the impact
coefficient on GDP growth increased to 0.40% for each 10% increase in broadband
penetration.
The same effect, whereby the economic impact increases with penetration, can be found in the
case of fixed broadband (see figure 7).