Arkansas in the Digital Economy

“Broadband is today what the highways were years and years ago. You had to have highways to get anywhere. Broadband connections are digital highways, and they are absolutely necessary for us to participate in the global economy.” James Winningham, Chairman of the Arkansas Broadband Initiative, says in regards to understanding the importance of broadband access to all Arkansans.

Broadband access enhances economic growth and performance. Documenting various measures of economic growth and performance between 1998 and 2003, an Economic Development Administration study concluded that communities which had mass-market broadband, “…experienced more rapid growth in employment, the number of businesses overall, and businesses in IT-intensive sectors, relative to comparable communities without broadband at that time.” The positive impact of broadband was found to be robust even for areas that were economically distressed. In short, the report states that, “Broadband is clearly related to economic well-being and is thus a critical component of our national communications infrastructure.”

In 2006, almost three-quarters of adults were online and 46 percent of households, or 54.6 million, had broadband access throughout the United States (“Broadband Worldwide: 2005-2011”). The use of IT has virtually transformed all sectors of the U.S. economy. E-Commerce retail sales have grown six times faster than total retail sales. Farmers use the internet to sell crops, track market prices and purchase supplies. The government issues E-Z passes to automate toll collection. Parents are even able to communicate virtually with their children’s school teachers. All of these uses translate into significant productivity gains and an increased standard of living.

According to the 2007 State New Economy Index, which ranks states based on their ability to compete in the new economy, Arkansas is significantly behind the rest of the country, ranking 47^th in the nation (Ewing Marion Kauffman Foundation). More specifically, the state has yet to catch up to the rest of the nation in regards to its competitiveness in today’s digital economy.

As the share of business and government transactions conducted through digital means continues to increase, it will become more crucial that Arkansas takes steps to retain and strengthen its digital infrastructure. The digital transformation has already revolutionized communities throughout the country and it can do the same for Arkansas. Although rural areas have been slow to join the global economy, the willingness of Arkansans to address these issues and embrace broadband deployment can help build the next generation communications infrastructure that will translate into job growth for Arkansans.