How important is mobile broadband latency for total factor productivity growth?

Harald Edquist

32nd European Regional ITS Conference, Madrid 2023: Realising the digital decade in the European Union – Easier said than done? from International Telecommunications Society (ITS)

Abstract: This paper investigates the relationship between the log change in mobile broadband latency and total factor productivity (TFP) growth based on data for 130 countries. It finds that there is a strong correlation between TFP growth and one year lag of latency growth once controlling for the growth of labor and capital services in OECD countries. The interpretation of the findings is that a 10 percentage points decrease in the growth of latency in period t-1 is associated with an increase of 0.3 percentage points in TFP growth. The findings are in accordance with the framework of general purpose technologies that suggests that the impact of new technologies often appear with a lag. Moreover, no relationship is found for non-OECD countries, which suggest that it is only OECD countries that are able to take advantage of the benefits of lower latency. One possible explanation could be that OECD countries have reached a higher maturity in digitalization and automation in production processes and thus are able to take advantage of the benefits of lower latency.

Keywords: ICT; Productivity; Latency; Mobile broadband networks; Economic development (search for similar items in EconPapers)
JEL-codes: D24 O33 O47 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eff, nep-ict, nep-pay and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:itse23:277954

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