Macroeconomic Importance of Broadband Networks. The Situation in Austria and a Comparison of Economic Policy Options

Several scientific studies have confirmed the positive link between the availability of broadband networks and a country's growth and employment level. A recent study by the World Bank shows that in highly developed economies such as Austria a 10 percent rise in broadband penetration (measured in terms of connections per head of population) translates into a rise of the average per-capita real GDP growth rate by 1.2 percentage points a year. Such positive effects result from greater efficiency in the provision of private and public services, the development of new markets and from bringing rural regions closer to the overall economic and social developments. Available data indicate that this development proceeds at a relatively slow speed in Austria. With approximately equal situations in 2002, a gap has since opened vis-à-vis countries such as Sweden or the Netherlands: in Austria broadband penetration is up to 15 percent lower. Compared to top-rankers such as Sweden, Austria was very late in realising the importance of this technology at the political level, and financing of its infrastructure has been meagre. If Austria wants to make up lost terrain it will have to take considerable public measures and investments in extending its broadband infrastructure.