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A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties

Wolfgang Briglauer, Niklas S. Dürr and Klaus Gugler

No 19-026, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: There is still hardly any empirical evidence on how divergent broadband technologies, and, by extension, bandwidth levels, influence GDP growth, or on the extent of spatial externalities at a regional level. Our study aims to assess the economic benefits of high-speed broadband networks within and across neighbouring counties in Germany. Utilizing a balanced panel dataset of 401 German counties with data from 2010-2015 as well as different panel estimation techniques, we find that the availability of high-speed broadband (which enables transfer rates of 50 Mbit/sec and higher) has a small but significant positive effect on regional GDP growth in the average German county, when compared to normal broadband availability. Furthermore, we find that broadband deployment in German counties induces substantial economic benefits in terms of direct effects and regional externalities. According to our main estimation results, an increase in bandwidth coverage of 50 Mbit/sec and higher by one percentage point induces arise in regional GDP of 0.05%. This effect is almost doubled if we also take regional externalities into account and is of particular relevance for urban counties. Furthermore, our cost-benefit analysis suggests substantial efficiency gains, as the total economic benefits of subsidy programs to encourage broadband expansion substantially exceeded their associated costs.

Keywords: high-speed broadband infrastructure; economic growth; spatial externalities; German counties; panel data (search for similar items in EconPapers)
JEL-codes: H23 H54 L96 L98 R11 R58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-reg, nep-tid and nep-ure
Date: 2019
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