Broadband infrastructure and economic growth
TL;DR: In this paper, the authors estimate the effect of broadband infrastructure, which enables high-speed internet, on economic growth in the panel of OECD countries in 1996-2007, and find that a 10 percentage point increase in broadband penetration raised annual per capita growth by 0.9-1.5 percentage points.
Abstract: We estimate the effect of broadband infrastructure, which enables high-speed internet, on economic growth in the panel of OECD countries in 1996-2007. Our instrumental variable model derives its non-linear first stage from a logistic diffusion model where pre-existing voice telephony and cable TV networks predict maximum broadband penetration. We find that a 10 percentage point increase in broadband penetration raised annual per capita growth by 0.9-1.5 percentage points. Results are robust to country and year fixed effects and controlling for linear second-stage effects of our instruments. We verify that our instruments predict broadband penetration but not diffusion of contemporaneous technologies like mobile telephony and computers.
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TL;DR: The role of cognitive skills in pro- moting economic well-being, with a particular focus on the role of school quality and quantity, has been reviewed in this paper, concluding that there is strong evidence that the cognitive skills of the population are powerfully related to indi- vidual earnings, to the distribution of income, and to economic growth.
Abstract: The role of improved schooling, a central part of most development strategies, has become controversial because expansion of school attainment has not guaranteed improved economic conditions. This paper reviews the role of cognitive skills in pro- moting economic well-being, with a particular focus on the role of school quality and quantity. It concludes that there is strong evidence that the cognitive skills of the population—rather than mere school attainment—are powerfully related to indi- vidual earnings, to the distribution of income, and to economic growth. New empiri- cal results show the importance of both minimal and high level skills, the comple- mentarity of skills and the quality of economic institutions, and the robustness of the relationship between skills and growth. International comparisons incorporating expanded data on cognitive skills reveal much larger skill deficits in developing coun - tries than generally derived from just school enrollment and attainment. The mag- nitude of change needed makes clear that closing the economic gap with developed countries will require major structural changes in schooling institutions.
1,396 citations
TL;DR: An overview of the empirical literature on ICT and productivity and the notion of ICT being a General Propose Technology (GPT) enabling further innovations is shed and most of the GPT evidence is found for the US, while evidence for European countries is harder to come by.
524 citations
TL;DR: In this article, the authors trace the evolution of productivity estimates to document how and when this perception emerged, concluding that early studies concluded that information technology was relatively unimportant and only after the massive information technology investment boom of the late 1990s did this investment and underlying productivity increases in the information technology producing sectors come to be identified as important sources of growth.
Abstract: It is widely recognized that information technology was critical to the dramatic acceleration of U.S. labor productivity growth in the mid 1990s. This paper traces the evolution of productivity estimates to document how and when this perception emerged. Early studies concluded that information technology was relatively unimportant. Only after the massive information technology investment boom of the late 1990s did this investment and underlying productivity increases in the information technology-producing sectors come to be identified as important sources of growth. Although information technology has diminished in significance since the dot-com crash of 2000 and observed growth rates have slowed recently, we project that private sector productivity growth will average around 2.4 percent per year for the next decade, only moderately below the average of the post-1995 period.
498 citations
TL;DR: In this article, the authors explore several possible explanations for the skill complementarity of broadband internet and find that broadband adoption in firms complements skilled workers in executing non-routine abstract tasks, and substitutes for unskilled workers in performing routine tasks.
Abstract: Does adoption of broadband internet in firms enhance labor productivity and increase wages? Is this technological change skill biased or factor neutral? We combine several Norwegian data sets to answer these questions. A public program with limited funding rolled out broadband access points and provides plausibly exogenous variation in the availability and adoption of broadband internet in firms. Our results suggest that broadband internet improves (worsens) the labor market outcomes and productivity of skilled (unskilled) workers. We explore several possible explanations for the skill complementarity of broadband internet. We find suggestive evidence that broadband adoption in firms complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. Taken together, our findings have important implications for the ongoing policy debate over government investment in broadband infrastructure to encourage productivity and wage growth.
404 citations
TL;DR: In this article, the authors examine the hypothesis that ICT penetration has positive effects on economic growth and conduct three empirical exercises to provide a comprehensive documentation of the role of ICT as a source of growth in the 1996-2005 period.
371 citations
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TL;DR: In this article, the authors consider the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development, and compare three models and compared to evidence.
16,965 citations
TL;DR: The authors examined whether the Solow growth model is consistent with the international variation in the standard of living, and they showed that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data.
Abstract: This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts. This paper takes Robert Solow seriously. In his classic 1956 article Solow proposed that we begin the study of economic growth by assuming a standard neoclassical production function with decreasing returns to capital. Taking the rates of saving and population growth as exogenous, he showed that these two vari- ables determine the steady-state level of income per capita. Be- cause saving and population growth rates vary across countries, different countries reach different steady states. Solow's model gives simple testable predictions about how these variables influ- ence the steady-state level of income. The higher the rate of saving, the richer the country. The higher the rate of population growth, the poorer the country. This paper argues that the predictions of the Solow model are, to a first approximation, consistent with the evidence. Examining recently available data for a large set of countries, we find that saving and population growth affect income in the directions that Solow predicted. Moreover, more than half of the cross-country variation in income per capita can be explained by these two variables alone. Yet all is not right for the Solow model. Although the model correctly predicts the directions of the effects of saving and
14,402 citations
TL;DR: In this paper, the authors show that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.
Abstract: Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.
12,469 citations
TL;DR: For 98 countries in the period 1960-1985, the growth rate of real per capita GDP is positively related to initial human capital (proxied by 1960 school-enrollment rates) and negatively related to the initial (1960) level as mentioned in this paper.
Abstract: For 98 countries in the period 1960–1985, the growth rate of real per capita GDP is positively related to initial human capital (proxied by 1960 school-enrollment rates) and negatively related to the initial (1960) level of real per capita GDP. Countries with higher human capital also have lower fertility rates and higher ratios of physical investment to GDP. Growth is inversely related to the share of government consumption in GDP, but insignificantly related to the share of public investment. Growth rates are positively related to measures of political stability and inversely related to a proxy for market distortions.
9,420 citations
TL;DR: In this paper, it was pointed out that many of the current disputes with regard to both economic theory and economic policy have their common origin, it seems to me, in a misconception about the nature of the economic problem of society.
Abstract: Many of the current disputes with regard to both economic theory and economic policy have their common origin, it seems to me, in a misconception about the nature of the economic problem of society. This misconception in turn is due to an erroneous transfer to social phenomena of the habits of thought we have developed in dealing with the phenomena of nature.
8,226 citations