Could Faster Internet Boost the Economy?

Study shows that broadband connections are growing the GDP.

A faster Internet connection makes it easier to update apps and download large files, but can it affect an entire nation’s gross domestic product (GDP)? The answer is a resounding yes, according to a study from Ericsson, Arthur D. Little, and Chalmers University of Technology that examined 33 member countries of the Organisation for Economic Co-operation and Development (OECD). The study showed that the quantified impact of “doubling the broadband speed for an economy increases GDP by 0.3%.”

Johan Wibergh, head of Business Unit Networks at Ericsson, explains why:

“Broadband has the power to spur economic growth by creating efficiency for society, businesses and consumers. It opens up possibilities for more advanced online services, smarter utility services, telecommuting and telepresence. In health care, for instance, we expect that mobile applications will be used by 500 million people.”

Less than one-third of one percent might not sound like much but the study puts the amount in perspective:

A 0.3% GDP growth in the OECD region is equivalent to USD126 billion, which in turn corresponds to:

  • More than the combined GDP of the Baltic countries
  • More than one-seventh of average OECD growth rate in the last decade
  • The annual total OECD aid to Africa

Broadband's Impact on Economy

Download Need for Speed on Ericsson.

If the impact on a country can be that significant, what would a faster Internet do for a city? We’ll know soon, thanks to Google Fiber, the project from search engine giant Google that is already installing 1,000MB per second connections in Kansas City, Mo., and Kansas City, Kan. With speeds about 100 times faster than most citizens are used to, can we expect a surge in business in the area? According to Mashable, it’s already happening:

As Google continues to build its high-speed Google Fiber network in Kansas City, more startups are moving into the neighborhood to make the most of the new service.

The first neighborhood to get Google Fiber, known on the map as Hanover Heights but locally as the Kansas City Startup Village, is the new home of early stage startups co-locating near one another to collaborate, leverage resources and to build a community based around growing a tech business.

Read Google Fiber Ignites Kansas City Startup Scene on Mashable.

How would a faster Internet connection affect a city? Let us know your thoughts in the Comments section.

Dec 06 2012