Does Better Internet Access Cause Rural Economic Growth?

A new examination of the correlation between internet access and unemployment, income and employment in rural U.S. areas finds no correlation. That matters because any government program to expand internet access availability is based on the fundamental assumption that internet access “leads to” or “causes” economic growth.

On the other hand, there is a subtlety: there might be a correlation (not causation, though) between use of internet access and economic growth.

So one researcher argues the focus should be on spurring adoption by people who do not use the internet, rather than a focus on increasing internet access availability in  “underserved areas” as such.

That actually is a rather non-controversial observation, as many observers have noted that teaching people how to use the internet, and why it is useful,  is among the keys to spurring use of the internet by the the last 15 percent to 20 percent of non-users.

What we need is “a nuanced approach to broadband policy that is targeted to those individuals who have not adopted broadband Internet,” according to Will Rinehart, American Action Forum director of technology and innovation policy.

For people to benefit from the Internet, they need to use it, not merely have access to it. Yet, the trend in policy is toward expanding broadband networks, not promoting their adoption. The best mix of policies will certainly vary depending on local needs, but the key to helping local economies is getting more people connected to the Internet, not merely increasing availability.

“Broadband access is not correlated with economic growth, although broadband adoption is,” he says.  

The “percentage of the population with access to 25 Mbps down/3 Mbps up broadband “doesn’t explain the unemployment rate, median household income, the change in employment, or the rate of population change in rural regions,” says Will Rinehart, American Action Forum director of technology and innovation policy.

An analysis using the 4 Mbps down/1 Mbps up standard also shows no connection, he says.  “This analysis calls into question whether the 25 Mbps download and 3 Mbps upload metric, the older 4 Mbps download and 1 Mbps upload metric, or any availability standard for that matter, provides a reasonable understanding of the underlying economics of rural communities,” says Rinehart.