Economic Impact of Broadband: A Review of the Literature
The economic impact of broadband manifests itself through four types of effects (see Figure 1).
The first effect results from the construction of broadband networks. In a way similar to any infrastructure
project, the deployment of broadband networks creates jobs and acts over the economy by means of
multipliers. The second effect results from the “spill-over” externalities, which impact both enterprises
and consumers. The adoption of broadband within firms leads to a multifactor productivity gain, which in
turn contributes to growth of GDP. On the other hand, residential adoption drives an increase in
household real income as a function of a multiplier. Beyond these direct benefits, which contribute to
GDP growth, residential users receive a benefit in terms of consumer surplus, defined as the difference
between what they would be willing to pay for broadband service and its price. This last parameter, while
not being captured in the GDP statistics, can be significant, insofar that it represents benefits in terms of
enhanced access to information, entertainment and public services.
Economic Impact of Broadband: A Review of the LiteratureThe economic impact of broadband manifests itself through four types of effects (see Figure 1).The first effect results from the construction of broadband networks. In a way similar to any infrastructureproject, the deployment of broadband networks creates jobs and acts over the economy by means ofmultipliers. The second effect results from the “spill-over” externalities, which impact both enterprisesand consumers. The adoption of broadband within firms leads to a multifactor productivity gain, which inturn contributes to growth of GDP. On the other hand, residential adoption drives an increase inhousehold real income as a function of a multiplier. Beyond these direct benefits, which contribute toGDP growth, residential users receive a benefit in terms of consumer surplus, defined as the differencebetween what they would be willing to pay for broadband service and its price. This last parameter, whilenot being captured in the GDP statistics, can be significant, insofar that it represents benefits in terms ofenhanced access to information, entertainment and public services.
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