By Ehsanul Hoq
World development report in 2016 published a paper on the relationship between broadband and economic growth. Undoubtedly, broadband speed in recent years have improved a lot. Broadband connection is considered as a high-speed connection. Less rich counties in the 1990’s didn’t have the opportunity to include themselves in the broadband speed. Now commercial service providers are offering broadband speed of 1,000 Mb/s used by 748 million broadband connections. The radical transformation of digitization of the world won’t be possible without the high-speed internet that broadband networks are offering us today.
The dawn of internet age has seen investors moving towards dot com rush. In the year 2000, investors in the developed countries started to mobilize their finances to improve the internet experiences around the world. Although the tech markets in the stock exchanges showed some ups and downs, the digital age has evolved to a greater extent since then. Using the optical fibers more and more underdeveloped nations got access to information technology to improve the lives of people. Using the high-speed internet many Asian countries like India, Malaysia, Singapore, and Korea have adopted western methods of development and got huge success. Today we will discuss how broadband speed has been helping less developed nations to become more financially independent.
- 10% of increase in broadband connection resulted in 1.21% GDP growth in developed countries and 1.38% in developing ones.
- Impact in employment level is high as 1% of broadband penetration increased 0.3% of employment in USA according to Crandall et al. (2007)
- Manufacturing, services, and IT firm productivity increased by 5%,10%, and 20% respectively.
GDP Growth
To understand the impact of broadband speed in the world, The World Bank used cross sectional analysis during the 1980-2006 period. They have established a growth model and found results based on the frameworks. Such results indicated increase in GDP growth of a nation due to the penetration of broadband connection. But the good news is that developing countries can enjoy more GDP growth than the developed ones. Based on the research results, if we compare the recent GDP growth rate scenario we can find the validation. India, Bangladesh, and some other Afro-Asian nations have joined the rank of high GDP growth in recent years due to their policy of digital adaptation. Many of those countries have transformed since joining the submarine cable line which has provided high-speed broadband connections to them.
Employment Rate
World population has reached 7.7 billion in 2019 where almost 1.4 billions live in India and 1.43 billion live in China. But a good portion of this mammoth population is unemployed. More than 3.5 billion 15 year or older people(including labors) are employed according to World Employment Social Outlook. Unfortunately, the number of people outside the labor force is 2.2 billion which is matter of concern. The poverty, hunger, and social discrimination all starts from the unemployment situations of billions of people around the world.
The researchers have found evidence regarding job creation for unemployed by the penetration of broadband connection in different countries. Once deployed broadband will generate employment across the economy, industries, and sectors. When the high-speed network is constructed thousands of engineers get jobs to build facilities including telecommunication technicians and manufacturers. After the installation the facilities need constant employees to maintain it throughout the year. Using the fast broadband speed many creative businesses have emerged. E-commerce, online education, social networking, and ride sharing companies started to go big using super fast internet and employ millions in the process. The control of supply chain and revenue stream has improved a lot since the use of broadband connection. Transferring currency was a large barrier for world trade but broadband speed has diminished the barrier in recent days. Now using digital payment gateways transferring wired money across the world has become more easier boosting up trade, stock market, and shopping experiences.
Firm Efficiency
Palo Alto is known as a tech-hub in the world. Many students from Harvard, Stanford, and other universities dropout from school every year to start a new venture that will take over the world. Think about Facebook which was launched by Harvard dropouts and shifted to Palo Alto to start their world domination. If Mr. Zuckerberg moved to Tanzania to operate his company, do you think he could’ve penetrated such a big demography? The answer is you need the best broadband connection in the world to make a company like Facebook, Instagram, and Snapchat.
But the companies I’ve mentioned above are tech companies giving digital services. What about a traditional manufacturing company. Coca-Cola has been a soda manufacturer since 1885 and they are using AR (Augmented Reality) in the bottling plants. Do you think without high-speed broadband connection, handling such technology in Coca-Cola is possible? The answer is No. Moreover, you can have personalized coke experience using online vending machines. This is cool. Not only IT companies are now depending on broadband speed but also manufacturing, services, engineering, teaching, and other sectors are becoming completely dependent on broadband connections.
There is no conclusion in writing for the benefits of broadband connection in the financial world. Tomorrow when we get more broadband speed we make a better future. But accessing the internet with a cheaper rate might help to creativity flow around the world. Who might know using internet in the future one genius will give us the theory of eradicating poverty from the world.
Ehsanul Hoq
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Ehsanul Hoq is an independent financial researcher and freelance content writer/Blogger
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