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Vodafone Institute for Society and Communications GmbH
High-quality and widely available internet is a prerequisite for the creation of innovative ideas and products. Telecommunication providers contribute to this by expanding the network. On behalf of the Vodafone Institute for Society and Communications, Prognos analysed whether and to what extent Germany's network expansion has strengthened its innovative strength and in which regions this has been particularly strong.
The result of the study is the Innovation Index Germany (IID.2022). Prognos thus presents a measure that quantifies the impulses of network expansion on economic and innovation strength in Germany.
The Innovation Index Germany is based on a time and region comparison of the 401 districts and cities between 2010 and 2019. Using precise data, the innovation effects of network expansion in Germany are not only presented as an overall picture, but also at district level.
Using time series analysis with a panel data set, we estimate the average correlation between network expansion and economic or innovation indicators. The actual development of an economic or innovation indicator is then compared with the development that would have occurred in the absence of network expansion. As a result, the respective growth contribution directly attributable to the network expansion is obtained.
In addition, scientific publications that deal with the influence of digital infrastructure on various innovation and economic indicators were evaluated.
During the period under investigation, the average broadband speed in the districts increased from 18 to 85 Mbps. An impact on the innovation indicators is evident two to three years after network expansion.
The evaluated scientific publications also demonstrate the influence of digital infrastructure on various innovation and economic indicators. There is particularly strong evidence to show the positive effect of network expansion on economic growth, productivity, and start-ups.
In concrete terms, the expansion of internet supply in Germany will result in more than 5 billion EUR additional economic growth per year. An improved network infrastructure thus lays the foundation for long-term value creation and increasing prosperity. However, good network infrastructure alone is not sufficient to generate innovation. For this, further favourable conditions are needed. At the same time, the expansion of the network contributes to an improvement of precisely these general conditions by increasing the attractiveness of the location.
The improved network infrastructure makes it possible to implement new ideas and bring them to the market. Scientific research also benefits. This is proved by more than 1,000 additional publications and almost 1,000 additional patents in the technology sector due to improved conditions in the digital network every year. Germany's competitiveness will thus be strengthened, especially in the technology and health sectors.
Germany shows significant regional differences in both these additional factors and in the improvement of the network infrastructure. Germany’s regions thus benefit from the network expansion to varying degrees and in different aspects. The greatest impact on innovation is in the regions where both the network infrastructure has been expanded and there is also a good starting point in terms of economy, science, and population. But regions with extensive network expansion are also particularly attractive for highly qualified people, so that the effects are mutually stimulating.
Network expansion in Germany enables a resilient and adaptable society, something made clear not least by the corona pandemic. A high-performance, fast internet thus not only establishes the necessary conditions for creating smart products and social prosperity, but also for a flexible response to a crisis.
All results summarised in a webmag: Read now (in German)
For more information, visit the Vodafone Website (in German)
Project team: Dr Georg Klose, Dr Oliver Ehrentraut, Dr Andreas Sachs, Jonathan-Aton Talamo, Philipp Kreuzer, Bernhard Wankmüller, Johanna Thierstein
Latest update: 02.11.2022
Head of Digital Development
Head of the economics division, Partner, Director
Prognos is one of the oldest economic research centres in Europe. Founded at the University of Basel, Prognos experts have been conducting research for a wide range of clients from the public and private sectors since 1959 – politically independent, scientifically sound.
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