Broadband Adoption and Rural Wealth Creation

An interesting new on-line data set from Go Daddy takes a look at internet use by rural residents and rural entrepreneurs.  Researchers are digging into this data and producing some interesting early results.  For example, the data suggest that places with more active adoption of internet and denser concentrations of businesses with an on-line presence outperform other rural regions on many important economic measures.  This is an interesting and very important set of findings.  It adds further fuel to the case for major investments in broadband to ensure full access for all Americans—regardless of where they live or their economic circumstances.  It also highlights the importance of adoption as opposed to simple access.  Rural adoption rates for high-speed broadband are much lower than in other communities, even when broadband is available.  And, many Main Street businesses still do not do business on-line.  So, we need to make broadband available, but we also need to encourage people to use it and to use it regularly as part of their daily lives.  Making this case will be certainly easier in the aftermath of the COVID-19 pandemic.   (The Go Daddy data and related analysis are publicly available here.)

I would make one further point about this research—it also shows the importance of promoting traded businesses in your community.  (Note:  A traded business sells outside of your community and brings in money from other locations.)  I would argue that an on-line presence suggests that a rural business is doing business outside of their home community, and is thus increasing the local store of wealth.   A strong base of these businesses is going to improve local economic performance. So, the Go Daddy data results may reflect this combination of broadband use and a larger share of traded sector companies.

Some additional new research offers further evidence in support of this hypothesis.   A new London School of Economics study looks at the role of entrepreneurship in combating urban poverty in the US.  It finds that higher levels of urban entrepreneurship in traded sectors have strong impacts on reducing local poverty and increasing local incomes.  High levels of entrepreneurship in non-traded sectors have much lesser positive effects.

So, what’s the lesson here?  We need to support more entrepreneurs—in rural and urban settings.  And, we need to focus especially on helping them do business outside of their home communities.  That’s a recipe for local wealth creation in every type of community.

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