Fact of the Week: The Bipartisan Infrastructure Law’s Broadband Investments Could Add $146 Billion to US GDP
Source: Matthew Sprintson and Edward Oughton, “The Contribution of US Broadband Infrastructure Subsidy and Investment Programs to GDP Using Input-Output Modeling,” Working Papers, arXiv.org, no. 2311.02431 (November 2023).
Commentary: A November 2023 working paper by Matthew Sprintson and Edward Oughton sought to quantify the impact of the recently passed Bipartisan Infrastructure Law on GDP. Specifically, the study looked at the impacts of programs within the bill that focus on broadband expansion. Namely, those programs were the Broadband Equity, Access, and Deployment (BEAD) program, the Affordable Connectivity Program (ACP), and the Tribal Broadband Connectivity Program (TBCP). The BEAD program, the ACP, and the TBCP consists of $42.45 billion, $14.2 billion, and $3 billion respectively. The study measured the impact on GDP using a Leontief Input-Output (I-O) model.
When looking at the total impact of all three programs, the authors estimated that the total $59.7 billion in public investment would add $146 billion to U.S. GDP. That is equivalent to about 0.657 percent of GDP. When looking at each program’s contribution to GDP, the BEAD program, the ACP, and the TBCP would add $84.8 billion, $55.2 billion, and $5.99 billion, respectively. The authors also estimated that the fiscal multiplier of the total investment to be 2.45. In other words, every $1 in broadband investment would return an estimated $2.45 in GDP. When looking at the impact of each program individually, the BEAD program had an estimated multiplier of 2.00. Additionally, the ACP and TBCP had estimated multipliers of 3.89 and 2.00, respectively. The authors also looked at which sectors would gain the most from the investments. Unsurprisingly, the Information sector was the biggest beneficiary, with an estimated increase in output of $16.9 billion. Outside of that sector, the Professional, Scientific, and Technical Services sector and the Manufacturing sector were the biggest beneficiaries, with output in those sectors increasing by $11.9 billion and $6.85 billion, respectively. While the study has its limitations related to the use of I-O modeling, its findings nonetheless support the growing body of evidence of the significance of IT and the internet as sources of economic growth.
