Headline Oct 19, 2014/

''' COMPUTING Computing '''

DO DIGITAL economies grow faster than analogue ones?  Rich-country Leaders seem to think so.

G7 and European Union governments are committed to a variety of digital stimulus packages.

Australia,  the biggest spender, has promised  broadband investments  of  $33.4 billion  (or 3% of GDP)  to connect  90%  of homes at  ultra-fast speeds.

''Digitisation''  involves adopting technologies like wireless phones and Internet access to generate, process and share information.

It seems to make sense that replacing slow technologies with faster ones might speed up sluggish economies.  But does the case for investment stack up?

Economic theory supports  digitisation. 

There is a deeply held belief among economists that better technology and cleverer ideas provide the best explanation of why economies grow.

Ideas and information are all-important in growth theory, as is the distribution of cutting-edge knowledge among workers.

Investment in computers,  broadband and the like  -things that help spread ideas quickly and cheaply   -should generate growth.

Digitisation and growth are also highly  correlated.

The  15-year period between  1995  and  2010  was one of strong economic growth and  and of a global boom in digitisation.

A new index built by Paul Katz of  Columbia Business School and Pantelis Koutroumpis of Imperial College London tracks the effect of this boom across countries.

The index adds a wider mix of digitisation metrics than previous rankings, using 21 measures including broadband speed,  coverage and reliability, and the cost and use of mobile telephones.

It also adds to existing indices by measuring the many ways digital networks can be used, from the availability  of online shopping to the provision of e-government services like road taxes for cars. 

Finally, it measures the ability of workers to use new digital technologies.

Digitisation varies hugely by country and region. Norway, leads the pack, closely followed by other advanced economies. 

Emerging-market digitisation has started to catch up, though in some countries like India and Indonesia the pace of progress is decidedly dial-up. The data also shows that there is much further to go on the road to full digitisation.

Globally there are fewer than  ten fixed broadband connections per 100 people; the range runs from close to  40  per  100 people in Hong Kong to below one in Kenya.

In some countries, a huge gaps exist between availability and usage. Senegal, for example has broadband coverage for  30%  of the population, but only 1% use it.

Establishing a link between digitisation and growth is one thing: proving way causality runs quite another.

Growth could be making consumers richer, so that they buy and use more digital technology.

Or it could be that richer governments are able to invest more.

In these cases growth is causing digitisation, not the other way around.

A 2011 paper by Nina Czernich, Oliver Falck, Tobias Kretschmer and Ludger Wossmann of the University of Munich gets round this problem. The paper looks at broadband adoption for a group of  25 OECD countries for the years  1996-2007.

The researchers first collect data on the telephone and cable networks on which broadband uptake is independent of current growth and investment.

This allows the authors to create a stripped-down measure of broadband penetration, which can then be tested to see how it affects economic expansion.

The findings are striking:
A 10% point point increase in broadband penetration results in an increase in annual per head growth of  0.9 - 1.5 percentage points.

At an aggregate level, digitisation boosts growth rates. 
The Honour and Serving of this operational research  post continues. Thank you for reading and see you on the following one.

With respectful dedication to the Students, Professors and Teachers of the world. See Ya all on !WOW!  -the World Students Society Computes-Internet-Wireless:

''' Digital Honours '''

'''Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless


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