Increasing Broadband Internet Penetration

In the OIC Member Countries

Figure 7: Fixed broadband economic impact vs. fixed broadband penetration

Source: Katz and Callorda (2016)

Figure 7 plots on the horizontal axis fixed broadband penetration and on the vertical axis the

contribution to GDP growth as calculated for several countries relying on a similar

econometric structural model based on simultaneous equations

. Validating the “return to

scale”, the figure indicates that the contribution to GDP growth increases with fixed broadband

penetration. For example, the contribution coefficient to GDP growth in Germany’s counties

with high (32%) and low (25%) population penetration is much higher (0.26 and 0.24

respectively) than in countries with lower fixed population penetration, such as Tunisia

(4.60%), with a contribution coefficient of 0.1010. The implications of these findings for

emerging countries are clear. Since the magnitude of economic contribution of broadband

technology increases with penetration, it is imperative that they strive to maximize overall

penetration.

The impact of broadband on job creation also varies between developed and emerging regions

within a single country. The research on broadband impact in Germany discussed above

highlighted differential job creation impact between advanced and emerging counties. In

counties with high broadband penetration, once penetration increased, the effect of job

creation is significant in the short term, fading over time due to a potential saturation effect.

On the other hand, in counties with low broadband penetration, the increase in broadband

deployment results in a negative impact on job creation (in other words, a reduction in the

number of jobs) in the short term, reaching a positive effect in the long term. A comparison of

these effects is presented in figure 8.

The models are compiled from different research articles from Koutroumpis (2009), Katz and Koutroumpis (2012), Katz

and Callorda (2014 and 2016).

10%

15%

20%

25%

30%

35%

10%

15%

20%

25%

30%

35%

40%

GDP Impact

Penetration

Morocco

(2014)

Jordan

(2014)

Tunisia (2014)

Germany High

Germany Low

LATAM

Brazil

Chile

Panama

Senegal

(2014)