Transcript Garner Connecting to Compete

Economic Outlook
Connecting to Compete:
Opportunities in Broadband
Elizabeth Garner
State Demography Office
Colorado Department of Local Affairs
2015
www.colorado.gov/demography
Key Fundamental Factors Underlying
The Rate Of Economic Growth
1. Physical capital (investment)
2. Trade (degree of openness)
3. Level of work effort (labor force participation,
demographics)
4. Spatial relations (location - climate, amenities, neighbors)
5. Governance
6. Human capital (education, technology)
Approximately 700,000 rural residents are spread over 98% of the state.
This equates to a rural population density of 6.8 people per square mile, one of the
lowest in the country.
Broadband and Economic Development
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For years “Infrastructure Development” has been
researched as a foundation for economic development.
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Historical correlation between Telecom density or
“teledensity” and GDP Growth
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Similarly, since the fifties, economists considered
technological change as the single most important
parameter for growth and labor productivity (Abramovitz
1956, Kendrick 1956, Solow 1957).
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General Consensus that Broadband Deployment and Use
will benefit businesses, consumers and the public sector
Economic Development Value of Broadband
• Broadband Deployment • Broadband Use
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Infrastructure
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Direct Benefits
Broadband Deployment
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Investment in equipment and inputs.
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Manufacturing of equipment
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Drilling
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Construction
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Ductwork
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Maintenance
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Expenditures/Investment in Broadband
Deployment leads to increase demand for goods
and services, increased incomes, GDP growth.
Broadband Use
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Increased efficiency/productivity/processes
Reduced transaction costs, optimize supply chain
Acceleration of innovation
Maximizes reach of labor, raw materials and
consumers.
Telemedicine
E-learning
Growth in service industries.
Entertainment – yes downloading Netflix …..
Impact to different industries differently
◦ Substitution for less productive workers – negative impact
◦ Net positive but redistribute between sectors.
What is the Economic Impact?
• Broadband Deployment
◦
Employment multiplier of 15 to 19 for industries related
to broadband deployment Every Billion $ = 15,00019,000 jobs
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Expenditures in Broadband Deployment supports or creates jobs in
equipment manufacturing and construction.
◦ Estimated 2003-2009 Nationally $26 billion = 434,000 jobs
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Broadband infrastructure investment
◦ 2010-2015 $30 billion in investment = 509,000 jobs.
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Forecast
◦ $6.5 billion in Telemedicine = 110,500 jobs.
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2007-12 jobs supported or created
◦ Results in increased incomes and GDP
(Source: Crandall and Singer)
What is the Economic Impact?
• Broadband Use
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1% point increase in Broadband penetration leads to
.2 to .3% increase in employment. (Crandall et al.
2007)
◦ For Colorado with estimate would be approximately 9,000
jobs for every 1% increase.
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10% increase in broadband availability produced a
0.7% decrease in the unemployment rate.(Crandall
and Singer)
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Research varies but most studies conclude that
broadband penetration has an impact on GDP from
.25 to 1.38 percent for every 10 percent increase in
penetration (ITU, 2012)
Broadband Relation to Industry Employment, 1999-2006 (Kolko 2010)
Percentage Point
Employment Change
Associated with Increase
in Broadband Availability
Management of
Companies
Utilities
Professional and
Business Services
Finance and Insurance
Administrative and
business support
services
Information
Construction
Agriculture
Real estate and rental
and leasing
Accomodation and food
service
Transportation and
warehousing
High Share
of
Higher Share
Technolog of Computer
y Inputs
Occupations
40.8
16.7
X
16.4
14.8
X
14.1
12
11.8
11.6
X
10.2
9.9
8.6
Employment
Location Tied
to
Population
X
X
X
X
X
X
X
X
Broadband Largest Impact When:
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Areas had no access to broadband prior to its installation;
Scaling occurs. The higher the percentage of broadband
adopters in a geography, the greater the economic impact;
Industries that have high transaction or labor costs—such as
financial services and tourism—adopt broadband;
There are improvements in operations at existing
companies.
New companies emerge tied to new technology
opportunities.
Rural & Isolated Areas
High concentration of College-educated workers
Broadband access is necessary but not sufficient for
economic growth
Broadband
• Demand for broadband internet access -- both fixed and
mobile -- is growing exponentially
• Telecommunications industry is investing billions of dollars
to update and expand their networks.
• Despite these investments, geography and population
density continue to be significant barriers for service in
the rural parts of states.
• This could put certain communities at a significant
economic disadvantage
Colorado Broadband Applications
• Infrastructure Deployment
• Commercial/Business
• Public Service Provision
• Education
• Personal Use/Entertainment
• Health
• During the state’s efforts to create the Colorado Blueprint,
local communities were asked what the keys were for economic
growth.
• Almost unanimously the issue of better (more robust coverage
and capacity) broadband was laid out as a key.
State Demography Office
Colorado Job Change by Industry, 2006 to 2013
Mining
Education
Health Services
Prof. and Business Services
Arts
Government
Agriculture
Other Services
Transportation and warehousing
Wholesale trade
Retail Trade
Utilities
Real estate
Finance activities
Information
Manufacturing
Construction
0%
Source: State Demography Office
20%
40%
60%
80%
100%
120%
140%
Source: State Demography Office
Greater than 50% Coverage and
Density Less than State Average
% Covered Density
La Plata
56%
31.63
Eagle
58%
33.24
Las Animas
62%
3.24
Grand
66%
8.40
Routt
72%
10.42
Garfield
79%
20.70
Pitkin
80%
18.32
Summit
89%
48.19
Correlation 43%
Correlation 56%
Correlation of 59%
Correlation 53%
Source: State Demography Office
Correlation = 33%
Negative Correlation
Negative Correlation - -19%
American Community Survey 2009-13
Summary Take Aways
Improving Broadband Access leads to benefits for businesses,
consumers and the public sector.
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Infrastructure Deployment
Linkages to markets
Tourism/Second Homes – Broadband is no longer a luxury good.
E-commerce
Education
Job growth
Telemedicine
Labor force options
Entrepreneurship
Cost of Living
Social networks
Industries Related to Broadband span industrial classifications.
Sole proprietors, work from home and location neutral face
potential improvements from additional broadband
• Attract and Retain Population
Summary – Broadband Relation to
Economic Development
Key Fundamental Factors Underlying The Rate Of Economic Growth
1. Physical capital (investment)
2. Trade (degree of openness)
3. Level of work effort (labor force participation, demographics)
4. Spatial relations (location - climate, amenities, neighbors, lower
cost of living)
5. Governance
6. Human capital (education, technology, the actual human capital)
Approximately 700,000 rural residents are spread over 98% of the state.
Further Research
• Better quantify location neutral and work
from home.
• Research investment in Broadband in
Colorado.
• Estimate the impact of broadband
expansion on Colorado employment
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Data issues related to recession and broadband
coverage data
Thank You - Questions
Elizabeth Garner
303-864-7750
[email protected]
www.colorado.gov/demography