Where should the global community focus its attention over the next fifteen years? Health, nutrition and education may seem like obvious top priorities but, more surprisingly, there is also a strong case for broadband access to be considered. Tripling mobile internet access from 21% to 60% in developing countries over the next 15 years could make this part of the world $22tr richer.
Achieving the 60% target for Egypt, where about 31% of the population are hooked up to mobile broadband today, could mean an extra benefit of $257bn for the country. This means that every Egyptian could be about $3,140 richer within 15 years. And such improvement in the lives and earning potential of poor people could indirectly help with other challenges; more prosperous people tend to be healthier, better fed and better educated.
This discussion matters, because the world’s 193 national governments will meet at the UN in September next year to finalize a list of targets for the world to meet by 2030. My think tank, the Copenhagen Consensus, has asked 60 teams of economists, including several Nobel laureates, to investigate which targets would do the most good for every dollar spent, to help this meeting make the best choices.
Professor Emmanuelle Auriol and Alexia Lee González Fanfalone from the Toulouse School of Economics suggest, in a new analysis, that broadband could very well be one of the best investments for the future.
Clearly, the rapid rollout of broadband services has transformed the lives of people in the industrialised world and there is every reason to expect that developing countries could benefit at least as much. Access to market information can make sure farmers know the market price for their surplus crops, so they are not cheated by unscrupulous traders, and fishermen can land their catch at the port offering the best price. Economic models project that tripling mobile broadband coverage in the developing world could add up to $400bn to global GDP and create over 10 million direct jobs.
A World Bank study showed that a 10% increase in broadband penetration increased GDP growth by 1.4% in low to medium income countries. This is important, because the digital divide among developed and developing regions of the world still persists and closing it could give a big boost to development. For example, while mobile broadband is used by over 83% of people in the industrialised world, penetration is only 21% in developing countries.
While governments in Europe and elsewhere continue to invest in faster and better broadband, the biggest benefits will always come from providing Internet connection to people who don’t already have it, most of whom live in developing and emerging countries. Here, the developing world can leap-frog industrialised countries, eschew expensive fibre-optic cables in what is called the “last mile” or access part of the network, and go straight to mobile broadband.
Mobile phone use is already spreading rapidly in developing countries, avoiding the need for old-style fixed infrastructure, and data services can use the same system. In China, three quarters of Internet users access it via mobile phones already, and in Ethiopia and Uganda, four out of five use the mobile internet. Thus rolling out mobile broadband seems a cost effective solution given its pervasiveness and recent technological advances in mobile networks.
The study shows that increasing mobile broadband about three-fold in developing regions – from 21% to 60% – will have a significant cost (about $1.3tr). This is simply the cost of the extra infrastructure needed to hook up about three billion more connections to the Internet. However, it will also increase GDP growth. By 2020, the benefits would be almost half a trillion annually, and these would increase further towards 2030. Over the coming decades the total benefit would reach about $22tr. For every dollar spent on mobile broadband, the academics estimate a benefit of $17. Investing in mobile broadband for the developing world looks like a really smart move.
If the goal of 60% broadband by 2030 was achieved, it would make each person in the developing world who was previously not connected almost $11,000 richer on average.
Broadband is such an important enabling technology that it is difficult to estimate the complete impact on the economy, which will vary with local circumstances. What the study does show, though, is that rolling out Internet access is money very well spent. Jobs are created directly in the organisation providing the network and indirectly in the supply chain.
Once in place, broadband helps to create more jobs in the wider economy. Companies become more efficient and innovative. All these factors increase the rate of economic growth.
Apart from the direct effects on economic growth and job creation, broadband can have some other very important benefits for Least Developed Countries (LDCs). Dr Pantelis Koutroumpis of Imperial College London contributed his analysis of these. 900 million people live in LDCs, and only 6.7% are Internet users. On the other hand, almost 60% of these people use a mobile phone.
Adding broadband via mobile networks would reach a large part of the population very quickly, giving them access to the same information as European or American citizens. But the benefits are much wider. Smartphones with simple adaptations can be used in a range of health screening tests (for example, for cardiovascular disease, HIV and other pathogens, or malaria) and the results sent straight to hospitals for an immediate response. Broadband access could provide educational material and improve schooling. And Internet access could enable real time, on-demand transport services for remote areas.
With the Internet being such an important resource in the modern world, broadband has become a vital platform technology which helps to boost economic growth and has the potential to lift people out of poverty. Health, nutrition and education are among the other important issues which would benefit. There is a strong case for governments looking to the next set of global targets to include broadband access.
Dr. Bjørn Lomborg, an adjunct professor at the Copenhagen Business School, directs the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit. He is the author of The Skeptical Environmentalist and Cool It. His new book is How To Spend $75 Billion to Make the World a Better Place.
