A new study published by the International Telecommunication Union, the United Nations agency for ICT, has outlined the positive impact of broadband, digitization and effective regulation on national economies.
The agency’s The economic contribution of broadband, digitization and ICT regulation report has found that an increase in both fixed and mobile broadband penetration has a positive impact on the economy.
In terms of digital transformation, the study shows that the economic impact of the digital ecosystem is greater than that resulting from fixed broadband and similar to that produced by mobile broadband penetration.
The study also found that effective policy and regulatory frameworks can drive growth in the digital ecosystem.
“With this landmark study, we can now quantify the impact of broadband and digital transformation on economic growth,” said ITU Secretary-General Houlin Zhao. “Investment in ICT infrastructure is an absolute priority to expand access to broadband services, and to help accelerate achievement of the Sustainable Development Goals.”
The economic impact of fixed and mobile broadband
The study finds that fixed broadband has had a significant impact on the world economy in the past seven years. The economic impact of fixed broadband is found to be higher in more developed countries than in less developed, while the economic impact of mobile broadband is found to be higher in less developed countries than in more developed countries.
Overall, an increase of 1 per cent in fixed broadband penetration yields a 0.08 per cent increase in Gross Domestic Product (GDP), while an increase of 1 per cent in mobile broadband penetration yields a 0.15 per cent increase in GDP (this translates into an increase of 10 per cent in fixed or mobile broadband penetration yielding an average increase of 0.8 per cent and 1.5 per cent respectively in GDP).
The economic impact of digital transformation
The study reveals that the economic impact of digitization is higher than that of fixed broadband and similar to that of mobile broadband. According to the study, achieving broadband penetration is only one aspect of required policies; maximization of the economic impact of digitization can only be achieved through the adoption of a holistic set of policies ranging from Internet access and computing to electronic commerce. It also recognizes that the digital ecosystem has an economic impact on productivity.
The impact of policy and regulatory frameworks
The ITU said the study offered further evidence of the importance of regulatory and institutional variables in driving growth in the digital ecosystem. It states that connectivity for digital services is significantly correlated with the level of advancement of ICT policies and regulations, as well as the competition and market power regulatory set-up. Further, investment in the digital ecosystem is directly and positively influenced by the maturity of ICT regulatory frameworks and by ICT competition frameworks.