Population Density "Predicts" Economic Growth; Quality Broadband Does Not

Though virtually everyone supports ubiquitous, quality broadband services, and even as policymakers and infrastructure interests always claim broadband is a platform for economic development, those claims almost always are unprovable.

At the micro level, “broadly speaking, there are two main sources of economic growth:  growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce,” economists might say. 

It might be argued that broadband helps with both, in the same way that roads, electricity, education and skill levels, “quality of life” attractions, airports and other transportation hubs, education, health and other social infrastructure also might be viewed as underpinning prospects for growth. 

Population density and geographical remoteness also are underlying issues. Though poverty, health care, educational attainment and other background issues exist in isolated rural areas, one reason economic development is stunted in such areas is low population density and remoteness. 

Most economic activity takes place in proximity to urban population centers, in large part because that is where most consumers and buyers live, and where the logistical costs of creating and delivering products is most favorable. 

In some areas, strength builds on strength, as a large, important economic activity creates an ecosystem that attracts other firms. 

Beyond all that, correlation is not causation. We might well note that quality broadband tends to exist where economic growth and other indices--educational attainment, incomes, wealth, housing prices, quality of schools and quality of life--also are high. 

Though it is widely believed that broadband access leads to economic growth, that cannot be proved, though many studies suggest a correlation. But correlation is not causation. 

“A  positive relationship between broadband expansion and employment growth could arise for other reasons,” says Jed Kolko of the Public Policy Institute of California. “For example, if

broadband providers expand in locations where they anticipate future growth, then the positive relationship would in part or entirely reflect this strategic decision of providers rather than a causal effect of broadband on growth.”

“Alternatively, population growth could cause both broadband expansion and employment

growth: Broadband providers could invest in areas where population (and therefore demand for broadband) is growing, while at the same time population growth could cause employment growth in industries (such as retail, restaurants, and personal services) that serve local populations<” Kolko says. 

We know correlations exist. But that does not mean we can prove that quality broadband actually produces outcomes such as economic growth, as much as we all believe it contributes to social outcomes we prefer.