Does Broadband Cause Development? In Developing Countries, the Answer Really Matters

By Gary Kim, Contributing Editor

Many people believe broadband deployment causes economic development, others think the relationship is more correlational than causal, and most might say there is no real way to assess the question. In developed countries, the answer might not matter. Whether broadband is merely correlated with job growth and economic development, or can "cause" it to happen, broadband access is nearly universal, though not everybody buys it or uses it. 

Federal Communications Commissioner Mignon Clyburn recently emphasized the need for quality research in policy making. That might be a bit of a luxury in the U.S. market, but the implications are quite serious for policymakers in the developing world. 

In the U.S. or Europe, there really is not a resource allocation issue for broadband or other types of infrastructure. We might not always be happy about the pace of speed enhancements or pricing, but generally speaking, the infrastructure is deployed. There is no public debate, because it simply is not relevant, between investing in broadband versus hospitals, airports, harbors, roads or rapid transit. 

Developing nations do face this analytical problem when contemplating whether to invest in broadband or other more traditional resources such as hospitals or schools. And for those policymakers, it matters greatly whether broadband actually can spur development, compared to sanitation, clean water, roads, mobile communications or banking infrastructure. 

In such cases, hard choices might actually have to be made, and it does matter a lot whether broadband provides more value than sanitation, clean water, ownership of land, transportation or medical care and education.

While it might be possible to quantify the immediate jobs impact of building broadband facilities, just as it is easy to quantify the cost of building roads, bridges, rail-lines, schools or hospitals, many policymakers in developing countries might not be so sure they can actually quantify whether a fixed amount of investment is better spent elsewhere, than on broadband.

Perhaps the issue in many developed countries is better framed as a matter of whether cheap mobile communications, just voice and text, can create development. There is quite a bit of anecdotal evidence that when mobile communications are made available, it "causes" all sorts of productive impacts. 

To the extent that getting a text message about today's market price for some crop can mean the difference between a day's travel to market, or use of that time in some other way, you can sense the productivity gains possible. 

In the U.S. and some other markets, it is something of an "academic" exercise whether broadband actually does cause economic development, and if so, how much. That is not the case everywhere. If the choice is between sanitation, clean water, medical care and education, compared to broadband, a rational policy might be to emphasize investment in all sorts of infrastructure before getting too involved in broadband. 

Whether that is the case for mobile infrastructure, and whether a stronger case can be made for mobile facilities, especially if the investment is not competing with other uses of capital, is in some ways a more-pressing question, one might say. 

(source: http://communication-solutions.tmcnet.com/topics/broadband/articles/106551-does-broadband-cause-development-developing-countries-answer-really.htm)