Regional inequalities in the impact of broadband on productivity: Evidence from Brazil

The aim of this paper is to perform an analysis of the impact of broadband on regional productivity in Brazil. The possibility of performing a regional approach, instead of the usual country-level analysis, constitutes an opportunity to decode the economic impact of broadband at territories which share a common institutional and regulatory framework as are the regions inside a same country. The main focus of this paper is to find out if the economic impact of broadband is uniform across all territories of the country. Results suggest that the impact of broadband on productivity is not uniform across regions, and seems to be yielding higher productivity gains for less developed regions, a result which is robust after controlling for differences in quality, network effects, human capital, sectorial composition, urbanism and the age of the workforce. Another important result verified in this paper is that faster download speed and critical mass to account for network externalities enhance of the economic impact of broadband. The fact that most underdeveloped regions in Brazil seem to be benefiting more from broadband may suggest that broadband can constitute a factor favoring regional cohesion in Brazil, although further research will be needed to confirm that asseveration