IOSR Journal of Economics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 7, Issue 3. Ver. III (May. - Jun. 2016), PP 01-10 www.iosrjournals.org DOI: 10.9790/5933-0703030110 www.iosrjournals.org 1 | Page Educational Level and Differential Impact of Broad Band on Economic Growth Héctor Díaz 1 , Miriam Sosa 2 and Edgar Ortiz 3 1,2 (Faculty of Economics, Universidad Nacional Autónoma de México, México) 3 (Faculty of Political and Social Sciences, Universidad Nacional Autónoma de México, México) Abstract: Research dealing with the relationship between information and communication technologies (ICT) and economic growth in developing countries has increased during the last two decades. However, the role of telecommunications by itself on economic growth is limited unless is also accompanied by parallel investments in education which favors its absorption and applicability. Contributing to strengthen this issue, this paper examines the long-run relationship between education, access to telecommunication services and economic growth focusing on broadband services. A sample of 57 countries with different educational levels is used to examine the impact of broadband on economic growth. Three panel data analysis are applied, for each group of countries divided by their educational level: low, medium, and high. The econometric analysis includes unit tests root tests, cointegration tests and a Dynamic Ordinary Least Squares (DOLS) panel model. The evidence confirms the presence of a differential impact of broadband on economic growth related to educational levels. Key words: broadband, dynamic panel, economic growth, education, ICT. JEL Classifications: I25; L96; L86; J24 I. Introduction An extensive literature about ICT role on economic growth has been developed during the last two decades, particularly promoted by international organizations (Bilbao, Soumitra and Bruno, 2013 [1]; ITU, 2012 [2]; World Bank, 2012 [3]; OECD, 2012 [4]). These studies have identified ICT as a key factor on economic growth through competitiveness and productivity changes in several countries. However, the research agenda has focused on technological change in developed countries, above all the U. S., and on analyzing how ICT have contributed on productivity changes (Dedrick, Gurbaxani and Kraemer, 2003[5], Van Ark, Hao, Corrado & Hulten, 2009 [6]; Silva & Teixeira, 2011 [7]; Biagi and Loi, 2013 [8]; Taylor, 2015 [9] and; Aboal and Tacsir, 2015 [10]). The ICT level and mechanisms of impact on competitiveness and productivity differ among each research; similarly, there is not a consensus about the speed and intensity of these changes. Nevertheless, most of the studies present a common vision: ICT have an essential role as a change agent for economic growth in all the economies, particularly high speed internet, regardless of the particular features and conditions of each country.Opposing that view, this paper examines the educational level of the labor force in each country as a key factor and indispensable condition on ICT use and exploitation (especially internet), that can produce changes on competitiveness and productivity, materializing on economic growth. We hypothesize that ICT infrastructure availability is not enough to promote changes on competitiveness and productivity (as international organisms point stress); its contribution rather depends on a set of conditions and features, among which stands out the educational attainment of the labor force (understood as education, in this research), in order to have an effective and productive use of this technology. Based on the above considerations, Broadband service was selected to examine this issue because it is the telecommunication service most associated with intellectual, productive and technological processes. Furthermore, Ortiz, Sosa and Díaz (2015) [11], have proved that broadband has a positive impact on economic growth and its effect depends of the educational level, which is not the case of other telecommunication services like fixed and mobile phone. Our hypothesis is tested using a sample of 57 countries divided into three groups according to their educational levels: high, middle and low separated in three equivalent intervals of 19 countries each one, for the period 2003-2013. The econometric tests include three panel data analyses: one for each of the three groups of countries; the econometric analysis includes (a) unit tests root tests to verify the order of integration of the variables; (b) cointegration tests to examine the presence of long-term relationships; and (c) an DOLS (Dynamic Ordinary Least Squares) panel model to estimate the impact of the access to telecommunication service (broadband) on economic growth, depending on the educational level. The rest of the paper is organized as follows. Section 2 reviews the literature, first that related to the role and relationship between ICT, education and economic growth, and second with a review concerning ICT, telecommunications and economic growth. Section 3 deals with methodological issues; it describes the data, the