Mobile broadband adoption leads to 0.6 – 2.8% rise in country’s GDP

Research by Imperial College of London and Ericsson confirms 10% increase of mobile broadband adoption causes 0.6 – 2.8% increase in economic growth depending on model specifications

The report confirms that when a country adopts mobile broadband, the result is solid overall economic development of the country and this has also happened in the past with deployment of established technologies such as fixed telephone lines, computers, mobile connections and fixed broadband connections.

The results shows that there is a significant effect from mobile broadband on GDP both when mobile broadband is first introduced and gradually as mobile broadband diffuses throughout different economies. The introduction of mobile broadband has an immediate positive effect on a country’s economy and a longer-term knock-on effect as mobile broadband gradually spreads to different economies.

Based on a two stage model controlling for simultaneity and reverse causality, the researchers find strong evidence that mobile broadband introduction and penetration causes GDP growth rather than vice versa. The results suggest that a 10% increase in mobile broadband penetration causes 0.6 – 2.8 percent increase in GDP, depending on the specification of the model. Moreover, there is a significant effect from lagged mobile broadband penetration, indicating that the full effect from mobile broadband infrastructure may take time before being properly realised.

By introducing a two stage model the researchers were able to model mobile broadband penetration as a logistic form of S-shaped diffusion curve.

The Ericsson Mobility Report (June 2017), states that at the end of 2016, around 3.2 billion subscribers (out of the world’s total population of 7.4 billion) had access to the Internet via mobile broadband technologies and it is forecast that an additional 2.6 billion subscribers will have mobile broadband Internet access by 2022.

According to GSMA (2017) mobile broadband connections have increased from approximately 27,000 in 2001 to 4,138,464,810 in 2016 i.e. an average growth of 122 per cent per year. Moreover, the use of data being sent via mobile networks has been increasing exponentially at approximately 65 per cent on a year-on-year basis during the period, 2010 – 2015.

Harald Edquist, Master Researcher in Macroeconomics at Ericsson Research and one of the report authors said, “Many countries in the developing world have used mobile broadband technology to leapfrog in their economic development in the past 10 – 15 years. I believe that if these countries, and others, continue to invest wisely in mobile broadband, they will have an excellent opportunity to continue to reap the benefits of continuous productivity improvements and new economic opportunities that simply would not be possible without mobile broadband.”

“We have always challenged traditional ways of thinking. Being true to our company purpose of innovating technology for good and creating new economic opportunities we make life better, whether through connecting people in new ways, building technologies for industries in transformation or creating a more inclusive society. This is set to continue as we enter an era of 5G, IoT and cloud network infrastructure,” added Edquist.

The report was conducted in collaboration with the Imperial College of London and Ericsson Research and the focus was on mobile broadband and its impact on economic development. The report examined data from 135 countries and the definition of mobile broadband was measured as a percentage of total connections and was defined as SIM cards registered on mobile network in a device capable of download speeds of 256 Kbps or greater, including 3G (e.g. WCDMA, HSPA) and 4G (e.g. LTE, WiMAX) networks technologies.

 

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