A discussion of the results of a study conducted in the Eastern Caribbean on the impact of broadband Internet on economic growth.
In 2015, the Eastern Caribbean Telecommunications Authority (ECTEL), which is the regional hub of the telecoms regulatory machinery in the Organisation of Eastern Caribbean States (OECS), commissioned a study on the Impact of Broadband on Economic Growth in ECTEL Member States. The study, which was funded under the Caribbean Regional Communications Infrastructure Project (CARCIP) project, and conducted by Mr. Curlan Gilchrist, St. George’s University in Grenada, sought to quantify, among the ECTEL Member States, the “extent to which investment in broadband technology and by extension broadband penetration would impact economic growth”.
It should be noted that such studies – to try to quantify the impact of broadband on economic growth – are not new. Organisations, such as the World Bank, Strategy& and McKinsey and Company, have conducted similar exercises, and found a relationship between penetration and economic growth. Specifically, for every 10 percentage point increase in broadband Internet penetration in low- and middle-income countries, economic growth increases by between 1.38 and 1.5 percentage points (Source: World Bnk).
How do the results of the ECTEL study compare? Across the five ECTEL Member States, namely, Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines, and for the period for the period 2002 to 2014, a correlation was found between economic output and broadband Internet penetration rate. From the model built, the overall finding was that “an increase in the broadband penetration rate of 1% would lead to an increase in real economic growth of 0.076% (other variables held constant)” (Source: ECTEL)
On initial review, the finding is disappointing., as it suggests that among the ECTEL countries, the impact is considerably less than that found in other parts of the world. For a 10 percentage point increase in broadband Internet penetration, low- and middle-income countries experienced between 1.38 and 1.5 percentage points increase in economic growth, versus 0.76 percentage points increase among ECTEL Member States. Having said this, there are numerous unknowns, which may make such comparisons flawed. For example:
- different models may have been used
- different variables may have been kept fixed
- different time periods may have been examined
- different the assumptions may have been made throughout the exercises; and
- the possible wide economic and social disparity of the low- and middle-income countries examined, when compared with the ECTEL Member States.
Further, and in the writer’s opinion, real life has a number of moving variables. It is not a model in which some variables can be held constant. Hence, although the model for the ECTEL Member States found a relationship between increasing broadband Internet penetration and economic growth, a broad range of policy, regulatory and environmental factors (to name a few) could be limiting the practical effect – of broadband on economic growth – that is experienced.
Additionally, a number of assumptions were made whilst conducting the study, which may need to be more closely examined. For example,
Among these countries, the introduction of broadband technology in the ECTEL member states is assumed or perceived to have impacted businesses through improvement in productivity, efficiency and competitiveness. Likewise, households are assumed to be able to apply this new technology to access a variety of services, thus providing them with the opportunity to improve their standard of living.
(Source: ECTEL)
Hence, while there may have been a (general) increase in productivity with increasing broadband Internet penetration in the region, there have been concerns that citizens, and even businesses, are not using technology as productively as they could be, which again could be reflected in the findings made.
In summary, it must be highlighted that policymakers worldwide, and even in the Caribbean, have been emphasising the importance of broadband Internet as a driver of development, and have used it to justify implementation of a broad range of initiatives and policies. In that regard, the ECTEL study is highly commendable, as it tries to provide some scientific basis for such claims. However, as evidenced by the brief discourse above, the study may have also raised more questions than answers. It may thus be prudent to encourage additional studies on the topic in the region, to not only confirm (or refute) the ECTEL findings, but also to more fully explain the impact of broadband Internet on economic growth in the Caribbean.
Image credit: Richard Giles (flickr)
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This is a very good article. It differs enormously from similar articles and insights we’ve had previously. It opens our eyes and invites us to look at the results and the data with a critical mind.
As mentioned in the article the variables ( and probably the samples, too ) used, for example ….. Don’t these tend to colour our perception of the findings?
For example, going to the source report ( given in the link above ) one notices that the major economic activities contributing to St Lucia’s GDP only amount to just about 46%. What about the 53+%? These could probably be numerous isolated economic activities difficult to quantify and bring into the focus of the study. But they contribute more than half of the GDP!
The extent, therefore, to which these isolated activities would be amenable to the forces of technology penetration, clearly would immensely tilt the results of the findings.