Paved with good intentions

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: Begging for government help would have made you a pariah in most parts of the high-tech industry a few months ago. But these days state aid, and how to dole it out, are nearly as hotly debated in online hangouts as cloud computing or Steve Jobs’s health. To understand the change of heart, just follow the money: the industry stands to do quite well from Barack Obama’s $819 billion economic stimulus package. If America’s new president has his way, a total of $37 billion will be spent on the digitisation of health records ($20 billion), a smarter power grid ($11 billion) and high-speed internet connections ($6 billion).

It is not just America that is betting on technology to help revive its economy. Though exact numbers remain to be determined, stimulus packages in other rich countries are likely to include large doses of technology spending, says Sacha Wunsch-Vincent, an economist at the OECD who has analysed more than two dozen such plans. A common theme is ‘broadband for all’, echoed by a British government report called ‘Digital Britain’ due to be published soon.

Broadband, goes the thinking, could boost economies in much the same way as railways and highways did in previous eras. Research shows that it is a general-purpose technology with effects not just in the telecoms industry, but all over the economy, as it enables new business models, processes and services.

Several studies conclude that, in slack economies, more broadband means more jobs. The Brookings Institution, a think-tank in Washington, DC, projects that for every percentage point increase of broadband penetration at state level, employment increases by 0.2% to 0.3% per year, equivalent to 300,000 jobs nationally. In the European Union, greater availability of broadband internet connections could create more than 2 million jobs by 2015, according to a study by Micus and WIK-Consult, two German consulting firms.

There is also evidence that investment in other sorts of information technology could boost growth. The Information Technology and Innovation Foundation, an American think-tank, estimates that $10 billion invested over a year in health-related technology, particularly standardised electronic health-records, would create more than 200,000 jobs. And spending $50 billion over five years to upgrade the power grid with technology such as ‘smart’ electricity meters could mean nearly 240,000 new jobs a year, it says.