Does Broadband Create Jobs?

By Gary Kim March 04, 2013

You might think it is axiomatic that “broadband leads to economic development.” But it has proven difficult to ascertain precisely if broadband contributes to economic growth or it is deployed as a result of growing development. In other words, it is possible that high usage of broadband reflects, and does not “cause” development.

Faster speeds often are considered drivers of economic development, but some say the evidence for that assertion is weak or contradictory at the moment. That does not mean the argument will not, someday, be settled more conclusively. But so far it is hard to pinpoint the precise relationship between broadband and economic development, even if most people assume there is a causal relationship of some significant magnitude.

It’s a perplexing thought, but is not new. The debate about “causation” was an issue for economists looking at the impact of computing as well.

South Korean researchers at the Korea Information Society Development Institute say in “A Study on the Impact of New ICT Service and Technology on Employment” that the national broadband project has not yielded the jobs that were expected.

Broadband has enabled entertainment, but not employment, the report on broadband impact apparently suggests.

Most studies, including studies of Germany, the United States and Korea generally have concluded that broadband does contribute in some measurable way to economic growth.

But such studies are difficult, much like similar sorts of studies on the economic impact of sports stadiums, airports, highways, electricity or many other elements of infrastructure. Few might doubt there is a direct relationship between infrastructure and development or job growth.

But that assumption often is just that: an assumption, simply because there are so many variables and there is no way to conduct a controlled experiment. So, one might argue, broadband is not directly creating so many new jobs because other forces in any economy are simply more powerful drivers of behavior.

Businesses might be afraid to invest. Consumers might be afraid to buy. Political instability, currency fluctuations, banking crises, inadequate physical or human capital or any number of other big influencers of economic growth overall, and hence of jobs, could be at work, making the analysis of broadband contribution impossible.

It might be easier to argue the “negative” case, namely that lack of roads, reading and math skills, refrigeration, electricity, sanitation and public health, stable currency, laws that protect the private property of entrepreneurs and so forth are negatives that inhibit potential economic growth, but probably are incapable of independently causing growth.

They are necessary, but not sufficient.

Edited by Brooke Neuman

Contributing Editor

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