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The Benefits of Broadband - June 2011 Bandwidth Report

Summary: A recent report on the spread of broadband throughout the world quantified the many benefits of broadband. The report found that broadband investment has a multiplier effect on ncreased GDP growth, productivity, and jobs.

The Broadband Commission for Digital Development was created to help achieve the Millennium Development Goals by the target date of 2015, as set by the United Nations. Towards that end, it is essential that countries everywhere are enabled with widespread broadband to reap the economic and social benefits of broadband. This article explores the benefits that broadband brings.

What are the Benefits of Broadband?

Broadband has been shown to beneficial to the economy in a number of ways. Widespread broadband has been shown to increase jobs, GDP, the employment growth rate, and productivity. Broadband benefits the lower to middle-income brackets more than higher-income brackets, providing a boost of 1.38 additional percentage growth to GDP for every 10-percentage-point increase in broadband penetration, according to a 2009 study by the World Bank (see Figure 1).

GDP Rise versus increase in technology

Figure 1: How Investing in Broadband Can Boost Economies
Source: BroadbandCommission.org

Broadband's Multiplier Effect

What happens when you upgrade the infrastructure to spread and speed up broadband networks? Direct and indirect effects are seen in a country's employment and GDP (see Table 1).

Table 1.1: Employment Impact of Broadband Network Construction in Selected Economies
CountryInvestment (USD millions)Employment Creation (number of jobsMultiplier
DirectIndirectSecondaryTotal Type 1*Type II**
United States6,39037,30031,00059,500127,8001.83 3.42
Switzerland10,00080,00030,000N.A.110,0001.38 N.A.
Germany47,560281,000126,000134,000541,0001.45 1.98
United Kingdom7,46376,452134,541211,000-2.78 -
Note: * (Direct + Indirect)/direct; ** (Direct + Indirect + Secondary)/direct The interrelationship of these three effects is measured through multipliers, which quantify the total employment change throughout the economy from one unit of change on the input side. Source: The Broadband Commission Report #2, June 2011.

Conclusion

The benefits of widespread broadband are many, including faster job growth, higher GDP growth rates, and employee productivity. Every dollar invested in broadband has a multiplier effect on job creation. This multiplier effect can be as high as 3.4 to 1, according to the commission's report.

Further Reading

Broadband: A Platform for Progress, Second Report
The second report from the Broadband Commission provided the data used in this report. Published June 2011.

By website optimization on 29 Jun 2011 PM

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