Broadband Connectivity and Economic Performance in MENA Countries

Abstract

Broadband connectivity is an important component of national economic infrastructure. However, empirical evidence on the relationship between broadband connectivity and economic performance remains limited for the Middle East and North Africa (MENA) countries. We examine the association between broadband connectivity and GDP per capita across 17 MENA economies from 2004 to 2023. We account for endogeneity, unobserved country-specific heterogeneity, and the dynamic nature of economic growth. The study employs the Arellano-Bond difference GMM and Blundell-Bond system GMM estimators. Our findings provide suggestive evidence of a positive association between broadband connectivity and GDP per capita. However, this association is not robust across all specifications and remains sensitive to the estimator used. The Wald chi-square statistics indicate the joint significance of the regressors. However, the Sargan tests reject the overidentifying restrictions in the difference GMM and one-step system GMM specifications, raising concerns about instrument validity. The high Sargan p -value in the two step system GMM specification is therefore interpreted cautiously. We recommend that broadband investment be pursued as part of a wider development strategy. However, the results do not imply that broadband expansion will automatically lead to sustainable growth.