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Does Broadband Boost Local Economic Development?

A paper out of the Public Policy Institute of California (PPIC) examines answers to “Does Broadband Boost Local Economic Development?”

Many might flame PPIC for daring to ask such a question, but with billions of dollars in public funds being spent by governments around the world, it seems appropriate for some science to be applied to study the benefits.

The federal government and the state of California, as well as other states throughout the nation, have made universal access to broadband service a public policy goal, assuming that multiple economic and social benefits will accrue from increasing broadband access.

The study found a positive relationship between broadband expansion and employment growth, but the benefits for local residents are ambiguous.

The positive relationship between broadband expansion and economic growth is stronger in industries that rely more on information technology and in areas with lower population densities. Although there is evidence leaning in the direction of a causal relationship, the study could not determine that broadband caused this economic growth.

In respect of personal benefits, average wage and the employment rate were seen to be unaffected by broadband expansion. The economic benefits to households are thus more ambiguous than they would be if employment growth also led to an increase in wages or the employment rate.

The 30 page report is very readable and it should contribute to the discussion beyond the borders of California.

By Mark Goldberg, Telecommunications Consultant

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