The effect of broadband on economic growth in Latin America: an approach based on a simultaneous equations model

Abstract

This work analyses the effects of broadband on economic growth in Latin America, distinguishing between mobile and fixed broadband. Although there are studies on the countries of the Organisation for Economic Co-operation and Development (OECD), in the Latin American region such research is scarce. This work uses data from 20 countries for the period 2010–2018 and estimates a simultaneous equations model based on Koutroumpis (2009) and Katz and Callorda (2013). The results show that mobile and fixed broadband make a significant positive contribution to the region’s economic growth. A 1% increase in mobile broadband penetration generates a 0.23% increase in GDP, while a 1% increase in fixed broadband increases GDP by 0.31%. This effect is greater than that found in other analyses which do not examine the complementarity between the two types of broadband.