THE IMPACT OF BROADBAND ON PROVINCIAL ECONOMIC GROWTH IN TURKEY

Abstract

The aim of this paper is to investigate the economic contribution of broadband on provincial economic growth and to test for the direction of causality. The paper employs a fixed effect panel model using the data for 26 provinces of Turkey over 2004-2008. The results of the analysis show that there is a close connection between broadband penetration rate and regional development of Turkey and this relationship is more pronounced for those provinces belonging to the high-income group than for the lower-income group. The results also show that the causal relationship between the real GDP and broadband penetration rate is unidirectional that the causality is running from the real GDP to broadband services. This implies that an increase in real provincial income raises the demand for broadband and leads to a more rapid broadband penetration but no reverse causality is found.