A Retrospective Study on the Regional Benefits and Spillover Effects of High-Speed Broadband Networks: Evidence from German Counties

45 Pages Posted: 31 Jul 2019

See all articles by Wolfgang Briglauer

Wolfgang Briglauer

WU Vienna

Niklas Dürr

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group

Klaus Peter Gugler

Vienna University of Economics and Business; European Corporate Governance Institute (ECGI)

Date Written: May 2019

Abstract

There is still hardly any empirical evidence on how divergent broadband technologies, and, by extension, bandwidth levels, influence GDP growth, or on the extent of spatial externalities at a regional level. Our study aims to assess the economic benefits of high-speed broadband networks within and across neighbouring counties in Germany. Utilizing a balanced panel dataset of 401 German counties with data from 2010-2015 as well as different panel estimation techniques, we find that the availability of high-speed broadband (which enables transfer rates of 50 Mbit/sec and higher) has a small but significant positive effect on regional GDP growth in the average German county, when compared to normal broadband availability. Furthermore, we find that broadband deployment in German counties induces substantial economic benefits in terms of direct effects and regional externalities. According to our main estimation results, an increase in bandwidth coverage of 50 Mbit/sec and higher by one percentage point induces a rise in regional GDP of 0.05%. This effect is almost doubled if we also take regional externalities into account and is of particular relevance for urban counties. Furthermore, our cost-benefit analysis suggests substantial efficiency gains, as the total economic benefits of subsidy programs to encourage broadband expansion substantially exceeded their associated costs.

Keywords: High-speed broadband infrastructure, economic growth, spatial externalities, German counties, panel data

JEL Classification: H23, H54, L96, L98, R11, R58

Suggested Citation

Briglauer, Wolfgang and Dürr, Niklas and Gugler, Klaus Peter, A Retrospective Study on the Regional Benefits and Spillover Effects of High-Speed Broadband Networks: Evidence from German Counties (May 2019). ZEW - Centre for European Economic Research Discussion Paper No. 19-026, Available at SSRN: https://ssrn.com/abstract=3423864 or http://dx.doi.org/10.2139/ssrn.3423864

Wolfgang Briglauer (Contact Author)

WU Vienna ( email )

Welthandelsplatz 1 1
Wien, 1020
Austria

Niklas Dürr

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group ( email )

L7,1
Mannheim, 68161
Germany

Klaus Peter Gugler

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

HOME PAGE: http://www.wu.ac.at/iqv/mitarbeiter/gugler

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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