Czernich, Nina; Falck, Oliver; Kretschmer, Tobias; Woessmann, Ludger (2010) examine the effect of broadband infrastructure on economic growth in 25 OECD countries from 1996 to 2007. Using an instrumental-variable approach, they find that a 10 percentage-point increase in broadband penetration raises annual per-capita growth by 0.9-1.5 percentage points. Their results are robust to country and year fixed effects and control for linear second-stage effects of their instruments. They verify that their instruments predict broadband penetration but not the diffusion of contemporaneous technologies like mobile telephony and computers. The study highlights the role of broadband infrastructure as a general-purpose technology that facilitates the distribution of information and fosters competition and innovation. The authors argue that broadband infrastructure may differ from other types of public infrastructure in its ability to accelerate economic growth through the development and adoption of innovation processes. The study uses a logistic diffusion model to account for the endogeneity of broadband penetration and finds a significant positive effect of broadband introduction and penetration on economic growth. The results suggest that broadband infrastructure has a causal effect on economic growth, with the effect being more pronounced in countries with higher broadband penetration rates. The study also tests for the validity of their instruments and finds that they are exogenous and not correlated with the diffusion of other technologies. The authors conclude that broadband infrastructure has a positive and economically meaningful effect on economic growth.Czernich, Nina; Falck, Oliver; Kretschmer, Tobias; Woessmann, Ludger (2010) examine the effect of broadband infrastructure on economic growth in 25 OECD countries from 1996 to 2007. Using an instrumental-variable approach, they find that a 10 percentage-point increase in broadband penetration raises annual per-capita growth by 0.9-1.5 percentage points. Their results are robust to country and year fixed effects and control for linear second-stage effects of their instruments. They verify that their instruments predict broadband penetration but not the diffusion of contemporaneous technologies like mobile telephony and computers. The study highlights the role of broadband infrastructure as a general-purpose technology that facilitates the distribution of information and fosters competition and innovation. The authors argue that broadband infrastructure may differ from other types of public infrastructure in its ability to accelerate economic growth through the development and adoption of innovation processes. The study uses a logistic diffusion model to account for the endogeneity of broadband penetration and finds a significant positive effect of broadband introduction and penetration on economic growth. The results suggest that broadband infrastructure has a causal effect on economic growth, with the effect being more pronounced in countries with higher broadband penetration rates. The study also tests for the validity of their instruments and finds that they are exogenous and not correlated with the diffusion of other technologies. The authors conclude that broadband infrastructure has a positive and economically meaningful effect on economic growth.