Broadband Network, Information Service And China 's Economic Growth

After 30 more years’consecutively high-speed growth, China’s economy starts to slow down, and needs change the ways of economic growth. To find a path for sustainable economic growth, it is imperative to have deeper insights of how information technology penetration influences the economy development.Using both theoretical and empirical approaches, start from the understanding of the role of information in economic activity, then along the path of classical division of labor theory analyze the mechanism of how information service affects economic development, and with the extended Solow growth model measure the contribution of broadband adoption and penetration to China’s economic growth, afterwards move down to industry level, characterize the intrinsic connection between information service and broadband network, and have an attempt to formulate an incentive mechanism for the optimization of broadband backbones’mutual connection market, and at last summarize the recent progress of division of labor under the auspices of Internet. Had below major results.Based on Yang-Borland’s division of labor model, derived a quantitative relationship between information service and the division of labor, inferred that the level of division of labor positively correlates with the percentage of information service sector in total GDP. The progression of division of labor needs the support of information service, while the specialization of information service sector also relies on the progression of division of labor. The theoretical inference is evidenced by the empirical analysis of the information service development of China and other advanced countries. With difference GMM method, the panel data analysis of 29 Chinese provinces’software industry throughout the 2007 to 2013 period showed that, 1% increase in the percentage of software industry revenue in GDP correlated with 0.234% increase in GDP per capita.Using panel data from a sample of 31 Chinese provinces (including municipalities) throughout the 2000 to 2011 period to examine the impacts that broadband developments may have had, found that 10% increase in broadband penetration raised annual per capita growth rate by～0.19 percentage points, and the evidence of a positive causal link became more significant when broadband penetration rate reached above～10%. Also found that the broadband contributions to economic growth in China’s east and mid regions are more visible than in the west region, the possible reason is the overall information technology application level in west region is far behind other regions.Built a model to formulate the inner connection between the information transmission costs and the production efficiency of internet service firms. With regional broadband access speed data, performed a correlation analysis of information service sector and internet access speed, and found a positive correlation result. Broadband market structure analysis showed that there exist unfair competition behaviors such as price discrimination etc. in China’s internet backbone connection market, and that resulted in the low efficiency of China internet infrastructure. Applying the Baron-Myerson model regulating a monopolist with unknown costs, proposed a possible form of price regulation and subsidy for China’s internet backbone connection market, and tested its feasibility with numerical simulations, which could provide with a theoretical basis for the formation of the incentive policy.The penetration of Internet is creating a ubiquitously connected information world. The recent breakthrough of internet of things and services speeds up the convergence of virtual and physical world, and enables producers collaborate at more complex level, consumers participate more actively in design and production phases, all these will help division of labor elaborate further.At last, had suggestion for governing policy improvements in the areas of promoting information service applications and the broadband network development, and proposed next step research agenda.