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Broadband access can improve lives for many
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WHERE should the global community focus its attention over the next 15 years? Health, nutrition, and education may seem like obvious choices. More surprisingly, there is a strong case for making broadband access a top priority.
Consider this simple fact: Tripling mobile Internet access over the next 15 years could make the developing world US$22 trillion richer. Such improvement in the lives and earning potential of poor people could help with the other challenges; after all, more prosperous people tend to be healthier, better fed, and more highly educated.
This discussion matters, because the world’s 193 governments will meet at the United Nations in September to finalize a list of development targets for the world to meet by 2030. My think tank, the Copenhagen Consensus, has asked 60 teams of economists, including several Nobel laureates, to investigate which targets would do the most good for every dollar spent, to help this meeting make the best choices.
In a new analysis, Emmanuelle Auriol and Alexia Lee Gonzolez Fanfalone of the Toulouse School of Economics suggest that broadband could be one of the best investments for the future.
Clearly, the rapid rollout of broadband services has transformed the lives of people in the industrialized world. There is every reason to expect that developing countries could benefit at least as much.
Access to market information, for example, can ensure that farmers selling their surplus crops are not cheated by unscrupulous traders, and that fishermen can land their catch at the port offering the best price. A McKinsey report estimates that bringing mobile broadband in the developing world to the levels of the industrial world could add US$400 billion annually to global GDP and create more than 10 million jobs.
Similarly, the World Bank has shown that a 10 percent increase in broadband penetration increased GDP growth by 1.4 percent in low- to medium-income countries.
Closing digital divide
This implies that closing the persistent digital divide between the world’s developed and developing regions could give a big boost to development. For example, mobile broadband penetration stands at 83 percent in the former, but only 21 percent in the latter.
In fact, developing countries can leap-frog the developed world by going straight to mobile broadband, thereby avoiding the need for expensive fiber-optic cables for the “last mile” — or access point — of the network.
Mobile phone use is already spreading rapidly in developing countries, making old-style fixed infrastructure unnecessary; data services can use the same system.
In China, three-quarters of Internet users get online via mobile phones already; in Ethiopia and Uganda, four out of five do. Thus, given the pervasiveness of mobile telephony and recent technological advances in mobile networks, rolling out mobile broadband seems a cost-effective solution.
The study by Auriol and Fanfalone shows that increasing mobile broadband about three-fold in developing regions — from 21 percent to 60 percent — will cost a substantial US$1.3 trillion, as a significant amount of extra infrastructure is needed to establish about 3 billion more Internet connections. But it will also increase GDP growth.
By 2020, the benefits would be almost US$500 billion annually, and would continue to rise each year. Over the coming decades, the total benefit would reach about US$22 trillion. As a result, every dollar spent on mobile broadband in the developing world would yield an estimated gain of US$17. That looks like a really smart investment.
Of course, broadband is such an important enabling technology that it is difficult to predict its full economic impact, which will vary with local circumstances. What the Auriol-Fanfalone study does show, though, is that rolling out Internet access is money very well spent.
Bjorn Lomborg, an adjunct professor at the Copenhagen Business School, founded and directs the Copenhagen Consensus Center. Copyright: Project Syndicate 1995-2015. Shanghai Daily condensed the article.
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