Broadband and Growth

The World Bank has found that in low- and middle-income countries every 10 percentage point increase in broadband penetration accelerates economic growth by 1.38 percentage points—more than in high-income countries and more than for other telecommunications services (Figure 1).16 In a similar study, McKinsey & Company estimates that ―a 10 percent increase in broadband household penetration delivers a boost to a country‘s GDP that ranges from 0.1 percent to 1.4 percent. Booz & Company found that ―10 percent higher broadband penetration in a specific year is correlated to 1.5 percent greater labor productivity growth over the following five years.Booz also suggests that ―countries in the top tier of broadband penetration have exhibited 2 percent higher GDP growth than countries in the bottom tier. These studies are the latest in the already extensive work estimating broadband‘s economic impact.

Developing other elements of the broadband ecosystem also provides economic benefits. For example, the growth of Internet-related services and applications has created jobs and led to the creation of new businesses. For example, in November 2009 Google had a market capitalization of $168 billion and employed 19,000 people in 20 countries. China‘s leading Internet search engine, Baidu.com, has a market capitalization of more than $14 billion and over 6,000 employees, and in 2008 had revenues of $460 million.

Developers have also been extremely active in creating applications for various handsets. Annual sales of applications for Apple‘s iPhone exceed $2.4 billion, as well as stimulating additional hardware sales. Thus broadband creates significant economic opportunities for users, service providers, application developers, and network operators alike. McKinsey estimates that ―bringing broadband penetration levels in emerging markets to today‘s Western European levels could potentially add US$300–420 billion in GDP and generate 10–14 million jobs.

-Building broadband: Strategies and policies for the developing world

Assorted

People, computers, and data

El Salvador’s Economic Rate of Return (ERR) Project Spreadsheets

Eight centuries of financial folly and counting

Our Giant Banking Crisis—What to Expect

The predictioneer: Using games to see the future

Global Economic Monitor

Global Monitoring Report 2010

Development Indicator Watch- ICT

International Internet bandwidth (bits per person) -International Internet bandwidth is the contracted capacity of international connections between countries for transmitting Internet traffic.

Source: WDI

Impact on Growth: 'a 10 percentage point growth in broadband penetration can raise annual economic growth per person by up to 1.5 percentage points'

Related:
Measuring the Information Society 2010;

The latest edition of Measuring the Information Society features the new ITU ICT Development Index (IDI) and the ICT Price Basket - two benchmarking tools to measure the Information Society

World Telecommunication/ICT Development Report 2010;

The Report reviews the 10 targets, proposes concrete indicators to monitor them and makes recommendations on policies and measures to help achieve them:
# To connect villages with ICTs and establish community access points
# To connect universities, colleges, secondary schools, and primary schools with ICTs
# To connect scientific and research centers with ICTs
# To connect public libraries, cultural centers, museums, post offices, and archives with ICTs
# To connect health centers and hospitals with ICTs
# To connect all local and central Government departments and establish web sites and e-mail addresses
# To adapt all primary and secondary school curricula to meet the challenges of the information society, taking into account national circumstances
# To ensure that all of the world’s population has access to television and radio services
# To encourage the development of content and put in place technical conditions in order to facilitate the presence and use of all world languages on the Internet
# To ensure that more than half the world’s inhabitants have access to ICTs within their reach

Broadband plan for high speed internet sent to Congress

Internet penetration - who’s online? ;

The country with the highest number of broadband subscribers in absolute terms is the United States, with more than 81 million. However, another way to use the data is to look at broadband penetration – essentially the number of subscriptions per 100 inhabitants. Looked at from this perspective, the Netherlands is the OECD leader, with a broadband penetration rate of about 38%; at the other end of the scale is Mexico, with a rate of just over 6%. It’s worth noting that the number of broadband subscribers isn’t the same as the number of broadband users, which tends generally to be higher...In countries where households tend to be bigger, the number of subscribers may be correspondingly lower.

US The National Broadband Plan

The plan sets ambitious, but achievable goals, including 1-gigabit connections to every community; affordable, 100 megabits broadband to 100 million households; and raising adoption from 65% to 90% adoption, heading to 100%.

Does Lowering the Price of Broadband Increase Its Use?

Malaysia’s broadband plan – stimulating the private sector

DATA:
National ICT Data
ITU's ICT Eye
OECD telecommunication price baskets

Policy Advice:
Building broadband: Strategies and policies for the developing world-Given recent developments in the broadband market involving networks, services, applications, and users, and the experiences of leading markets—especially Korea—this report proposes that broadband be reconceptualized as an ecosystem rather than just high-speed connectivity. Using the ecosystem concept, the report discusses the characteristics of broadband strategies and identifies potentially useful policies and regulations.

*Source of the chart above, Malaysia Economic Update, Box 13,Developing Broadband in Malaysia

Country Economic Updates

Malaysia;

the Malaysian economy is projected to grow again at 4.1 percent in 2010, following a contraction of 2.3 percent in 2009.

The Malaysia Economic Monitor calls attention to four key policy thrusts to meet this challenge:
* Promoting further specialization of the economy
* Improving the skills base of the labor force
* Making growth more inclusive
* Bolstering public finances

Philippines;

Real GDP growth is projected to reach 3.5 percent in 2010 and 3.8 percent in 2011.Our analysis shows that, so far, the size and pace of the peak-to-trough and the projected recovery in 2010 is closely aligned with past recessions in the Philippines. However, unless reforms address long-standing growth bottlenecks, the recovery’s shape over the medium-term will move from V to \/¯¯ , i.e., stabilize at a lower equilibrium growth rate.

Sunday Economic Indicator - I/S Ratio shows inventory replenishment

Coverage of an economic indicator every week- the idea borrowed from Sunday Function over at Built on Facts blog.


Definition: Inventories / Sales Ratios (Retail) - The inventories / sales ratios show the relationship of the end-of-month values of inventory to the monthly sales. These ratios can be looked at as indications of the number of months of inventory that are on hand in relation to the sales for a month. For example, a ratio of 2.5 would indicate that the retail stores have enough merchandise on hand to cover two and a half months of sales.

Latest Numbers: Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of February was 1.27. The February 2009 ratio was 1.46.

Implications: 'this is the message of the inventory cycle, which appears to have largely run its course. Inventories surged as the recession intensified, leaving firms scrambling to bring output in line with the new level of sales. Now, firms have inventories under control'

More on the Implications:

Today's data is also encouraging because it shows that any business expansion we've seen in the first part of 2010 isn't outpacing consumer demand, with inventory levels remaining nearly flat. Considering how strong retail sales were in March, there's also reason to believe that inventories will fall during the month -- unless more hiring produced additional goods to compensate for the increased buying. Given the current balance of inventories and sales, there's little reason to believe U.S. businesses should engage in many more mass layoffs unless consumer demand unexpectedly weakens significantly.

Over at Macroblog more analysis;

I have been pondering those data as well, ever since the advance fourth quarter gross domestic product report indicated that 3.4 percentage points of the then-reported 5.9 percent annualized growth rate was accounted for by a slowing in the pace of inventory decumulation. (The numbers have subsequently been revised to 3.8 percentage points of a 5.6 percent growth rate.) It certainly appears that inventory-sales ratios have reverted to the prerecession norm, justifying Duy's sense that inventories will not be a big part of the economic story as we move through 2010.

That conclusion does rest, of course, on the likelihood that a downward trend in the ratio truly did break in the middle part of the decade. As the chart shows, the same pause in the trend occurred in the mid-1990s, only to commence its southward trek on the other side of the 2001 recession.

But the situation is even more curious than that. If you dig a little deeper, you find that not all inventory-sales ratios tell the same story. In particular, inventory-to-sales ratios at the retail level look very lean relative to prerecession levels while manufacturer's inventories still appear to be relatively bloated.

What, exactly, is that chart trying to tell us? Does it represent some shift in supply-chain management, with inventory holdings being pushed down from the retail level to manufacturers? If not, can we expect some resurgence in retail inventories (as the Duy-cited Bloomberg article suggests), coupled with continued decumulation at the manufacturing level? And what would be the net effect of such developments on aggregate inventory levels?

From Bloomberg: The ratio of business inventories to sales was 1.25 in January, just above a 29-year low of 1.24 set in 2006 and down from a recession high of 1.46 in January 2009. The ratio averaged 1.3 in the last economic expansion, from 2001 to 2007.

Other tables released with the data;

Table 1. Estimated Monthly Sales and Inventories for Manufacturers, Retailers, and Merchant Wholesalers
Table 2. Percent Changes for Sales and Inventories--Manufacturers, Retailers, and Merchant Wholesalers
Table 3. Estimated Monthly Retail Sales, Inventories, and Inventories/Sales Ratios, By Kind of Business

Comments: Businesses generally prefer 1.45 months worth of goods. Though a lagging indicator, a window onto future orders and production activity. Remember GDP is calculated by adding all the sales in the economy plus change in inventories.

Related:
Manufacturing and Trade Inventory-to-Sales Ratio: Inventory Adjustment Over;

inventory to sales ratio. This has declined sharply to 1.25 (SA) from the peak of 1.46 back in Dec 2008. This could decline further - the trend is definitely down over time - but clearly most of the inventory adjustment is over.

This is important because the change in inventory added significantly to Q4 GDP growth. (See BEA line 13: the contribution to GDP in Q4 from 'Change in private inventories' was 3.88 of the 5.9 percent annualized increase in GDP.)

Inventories to Sales on Google Fast Flip

What We Don’t Know About the Economy

Economic History Lesson in Brief

"...E. and S. Europe were just as backward in industrializing...as L. Am. and S. Asia."-Arthur Lewis

From Garret Jones twitter feed.

Trinidad and Tobago- finding binding constraints not always easy

Source: Trinidad & Tobago: Economic Growth in a Dual Economy

Related:
Trinidad and Tobago- data from IDB

Sir Arthur Lewis Institute of Social and Economic Studies,
The University of the West Indies

Housekeeping - Blogs and Division of Labor

Slight change to the coverage and focus of our blogs.

Tracking the Economy- the themes to be covered include economic indicators, country economic updates, interviews with economists, IMF reviews, Country Economic Memorandums, economic growth, poverty, economic policy, Small States, Tourism Economics, Statistics.

MTEF- PFM, Public Finance, Debt Management, Public Management and Public Policy.

The Bayesian Heresy- Art, Psychology, Religion, Behavioral Economics, Book Reviews,Current Affairs, Politics,Spirituality, Effective Habits, Personal Productivity, Design, Philosophy, Carnival of Podcasts, Tourism, Parenting, Education.

The Blog University- hopes to be blog version of MIT's OpenCourseWare

Control of Corruption- everything about corruption and governance