The Case for a Latvian Version of the Obama Broadband Package

New SSE Riga/BICEPS occasional paper by Alf Vanags (BICEPS).

Executive summary. The paper investigates whether the evidence suggests that a broadband package on the lines of the Obama package in the US or the Digital Britain initiative in the UK could be an appropriate instrument in recession-hit Latvia. The idea would be to use the opportunity of the recession to create a 21st century digital infrastructure which would boost productivity and growth. Using the three pronged framework of infrastructure, readiness and use developed by Fornefeld, Delaunay and Elixmann (2008) it is shown that Latvia lags behind most of the EU in most broadband indicators. Latvia also lags in productivity with both manufacturing and services managing only 50% of the productivity level of the EU-27. A broadband development programme offers a horizontal level policy option to boost productivity, thereby avoiding the pitfall of trying to prioritize individual sectors. However, a programme is needed as well as a managing institution and most importantly funding. Perhaps the re-constituted eSecretariat now located at the Ministry of Regional Development and Local authority Affairs could serve as a managing institution. As for funding, perhaps the 4% allocated to the information society in the 2007-2013 structural funds programming period could be used or even increased. Also, Latvia is finally getting in place the legislation for public private partnership and digital development represent a potentially attractive area for such project.