Connect the Blue Continent
The Rationale for Affordable Broadband in the Pacific Islands: Economic development
Introduction
Remote Pacific Island communities are at risk of a new, long-term poverty and aid dependency cycle because they are unable to engage in modern economic activity using affordable, broadband-speed Internet access (“broadband”).
As the result of small stagnant economies and few working opportunities, more than 150,000 Pacific islanders have migrated to United Sates and Hawaii (John M. July 2012). This is a major threat to the viable existence of these communities into the future.
The economic rationale for investment in broadband infrastructure, systems and skills development in the Pacific Islands region (the ‘Blue Continent’) is based around enabling businesses and government to participate in the advanced global economy.
Economic rationale
Penetration of broadband has spread rapidly during the last decade. Businesses, communities and governments have become dependent on broadband connectivity to facilitate communication and economic activity.
However this has occurred mostly in developed countries.
Recently, the booming economies of China and India have significantly increased their online presence and are using digital techniques to engage in diverse economic activities.
But how can broadband make a significant difference to growth and development of a remote island economy?
In any-sized economy, access to broadband accelerates the distribution of ideas and information that leads to the development of new products, processes, and business models.
This increases creativity and innovation and, as a result, competition in the market. For an increased number of businesses in the market to be successful, the production of higher quality goods and value added services is a key factor, thus productivity, quality and efficiency is going to be improved (OECD, Ministerial Final Report 2007).
Importantly, for small island economies, broadband enables specialist goods and services to be distributed in a larger, wider global market, and enables optimal sourcing of inbound material, service and goods. This opens up the possibilities for economic activities in remote islands and supports the creation of more business enterprises.
An increased number of enterprises and increased investments contribute to improving employment and GDP.
Greater workforce participation creates higher tax revenue and lowers welfare consumption. The benefits of an active population dissipate into mental health, social harmony, and cultural participation. A stronger economy and connected citizens creates greater economic contributions.
According to a study by CESifo Working Paper No. 2861 on a panel of OECD countries, impacts of broadband investment and economic growth were investigated. The results show a strong relationship between broadband and economic growth.
Statistics show after a country has introduced broadband, GDP per capita is 2.7 to 3.9 percent higher on average than before its introduction. In terms of subsequent diffusion, an increase in the broadband penetration rate by 10 percentage points raises annual growth in per-capita GDP by 0.9 to 1.5 percentage points (Czernich.V, Falck.O, Tbias. K, Ludger. W, Dec.2009).
Small island economies are no different in this regard. This holds true especially if regional co-operation leads to the bounding together of larger ‘open’ economic trading zones. Using broadband, small island communities can collaborate with each other to create network-oriented supply chains and value chains for manufacturing and trading good and services. They can also collaborate to optimize the prices and inbound logistics of goods and services needed.
Conclusion
Broadband acts as an enabler of trade through greater business interactions and promotion. Small enterprises can benefit from shared international business experience and relevant market data in a variety of industries.
New industries of eco-tourism, climate science research and advanced small-component manufacturing could also develop from broadband-connected remote island communities. This connectivity enables the knowledge-sharing and the logistics network to be assembled and operated.
These are some of the reasons why it is a priority to invest in affordable broadband infrastructure, systems development and skills capacity development across the Pacific Islands communities – to Connect The Blue Continent.
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Authors: Chris Sampson, Bahar Forghani, Elizabeth Hart
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