When Better Broadband Might Not Help

The Wisconsin Economic Development Corporation, in detailing the impact of the Covid-19 pandemic on various sectors of the Wisconsin economy, recommends three priorities: 

• Get Everyone Back to Work

• Fix Broadband:

• Support Innovation

It is what one might expect, but also shows the difficulty of generating economic growth where it might not be happening organically. An isolated region heavily dependent on tourism might prefer to diversify, but there are good reasons why all sorts of firms and industries do not locate themselves in remote areas. 

A region with low population might similarly wish to spur economic growth by focusing on one or two new potential growth areas, but with no natural advantages in human resources, distribution networks or other underpinnings of an industry. 

That is not a criticism of a report by the WEDC, simply an observation that economic growth is not easy when low population, remote location, lack of skills or knowledge or other attributes that attract people and firms are lacking. 

Nor is it easy to suggest how the situation might be changed, by any set of feasible government policies other than reopening the economy.

There is a direct and measurable causal link between “going back to work” and worker income and tax revenue. The causal link between broadband and economic growth or innovation is much harder to demonstrate. 

In fact, there might be correlation without causation, in the same way that better broadband tends to exist where people are wealthier, live in higher-density areas, have higher education attainment and are younger. 

People generally believe there is such a causal relationship, but the reverse might generally be the case. Economic success leads to demand for better broadband. 

Virtually everyone “believes” (or at least acts as though they believed) that advanced technology (faster broadband, artificial intelligence, IoT, 5G) leads to an increase in productivity. People, organizations, firms and countries that have and use more of such assets are presumed to make faster productivity gains, and generate more economic growth.

The problem, aside from inability to measure precisely, seems to be that the evidence is suspect. It still does not appear that better, faster, more extensive broadband adoption actually is related to productivity gains.

source: Bureau of Labor Statistics

Broadband and innovation are good things. It simply is not clear that better broadband leads to economic growth in any direct way.