Rural Economies Found to Benefit from Broadband

STILLWATER, OK — New research funded by the National Agricultural and Rural Development Policy Center (NARDeP), and published in Telecommunications Policy, comes one step closer to showing that broadband is an engine for growth in rural U.S. communities, especially when a large segment of the population adopts the technology. These findings are among the first to provide evidence to support a long-held assumption that rural economies are boosted by broadband.

“When broadband first came out, there were all sorts of claims that it would be great for rural areas, but until now we really hadn’t seen any firm evidence on whether broadband impacts economic growth in these areas,” said Brian Whitacre, an associate professor of agricultural economics at Oklahoma State University who led the study. “We found that rural counties that did a good job of adopting broadband had higher rates of income growth and lower rates of unemployment growth.”

Strong Relationship between Broadband Adoption and Economic Growth
The researchers used 2010 U.S. county-level data to compare all non-metro counties in terms of their broadband availability and adoption. They then compared these counties in terms of their economic growth between 2001 and 2010, using indicators like household income, employment growth, and number of firms. When they analyzed the two data sets together, they found a significant relationship between broadband adoption and economic growth.

For example, counties with a high level of broadband adoption — those in which 60 percent or more of the households had a wired high-speed Internet connection — experienced higher income growth and saw a smaller increase in unemployment rates than did counties that did not reach the 60 percent threshold. Similarly, counties with low adoption rates — those in which less than 40 percent of the households had broadband — saw lower growth in their numbers of businesses and total numbers of employees. The researchers found that broadband availability alone was far less important to growth than adoption — a point that has important policy implications, said Whitacre.

Availability Must be Followed by Adoption and Training
“If you look at how we’ve been spending money, the vast majority goes to establishing infrastructure in rural areas. There’s not much being spent on showing people what can be done with broadband, or getting people to use it productively,” he said. “We might want to spend more public funds on promoting adoption, as opposed to just giving people access by subsidizing the providers.” This could range from teaching elderly citizens how to use a computer, to giving businesses training in selling online or establishing a social media presence.

In addition to Whitacre, the research team included Roberto Gallardo, an associate extension professor at the Mississippi State University Extension Center for Technology Outreach and Sharon Strover, the Philip G. Warner Regents Professor in Communication at the University of Texas.