The Effectiveness of Government Policies in Broadband Deployment - Adoption, Usage, and Global Impact of Broadband Technologies - page 111

Figure 1. Broadband penetration rates per 100 households for select countries, December 2008 (OECD,
2009)

mon significant reason is that efficient information
infrastructures, theoretically, can enhance pro-
ductivity by providing intelligent networks that
can accommodate converging voice, data and
electronic commerce applications (Frieden, 2005).
These infrastructures can provide a competitive
advantage in the knowledge-based industries that
include data processing, insurance, management,
customer relationship management and logistics
and distribution.
Such a competitive advantage in the area of
information and telecommunications technology
(ICT), when combined with a stable economy and
favorable regulatory system, should translate to
higher levels of Foreign Direct Investment (FDI).
In this respect, endogenous growth theory argues
that it is technology and human capital, when en-
dogenously present, that contribute to continuous
economic growth and therefore play an essential
role in a country's development (Easterly, King,
Levine, & Rebelo,1994; Barro,1997). Specifically,
in developed countries, existing ICT infrastruc-
tures have been found to causally attract FDI; a

higher level of ICT investment leads to a higher
level of FDI inflows. This suggests that ICT
contributes to productivity and economic growth
indirectly by attracting more FDI (R. Gholami
et. al., 2006).
FDI increases domestic capital formation,
augments host country stocks of technology and
managerial expertise, improves access to export
markets, and provides a comparatively stable
source of external financing (Matthews,1999;
Lehman, 2002).
The deployment of such networks, either di-
rectly through the use of tax dollars or indirectly
by use of appropriate policies, such as spectrum
allocation by fiat, thus would allow national gov-
ernments to exploit the benefits of e-government.
This could encourage end-user adoption, by ef-
fectively lowering the usage cost of applications
for the consumer, thus improving living standards
and enhancing productivity. Specifically, tele-
medicine would allow governments, particularly
in developing countries where “transactions costs
are high because of logistical problems (Sein and