Optimal intertemporal broadband investments to promote regional economic development

This paper links broadband development to regional economic growth, focusing on the optimal timing of investments. A production theoretical framework is proposed for characterizing the relationship between broadband investment and economic development. A two-stage estimation procedure combining Convex Nonparametric Least Squares with Linear Programming is developed for estimating optimal investment paths. The model framework is applied to a novel dataset comprising 21 regions in the Baltic countries. The results indicate that the Gross Regional Domestic Product could have been increased by up to 10% by adopting optimal regional investment paths. We find intercountry differences, where Latvian regions exhibited more inefficient investment strategies compared to regions in the neighbouring countries. There are also signs of overinvestment in broadband in some regions.