The internet and regional economic development

This paper compares real private investment Expenditure among rural communities in the Province of Alberta, Canada that received a government provided broadband Internet service in December 2000 called "the SuperNet". A transitional period is empirically examined by comparing investment levels 2 years pre-SuperNet and 3 years post-SuperNet. The data indicate an increase in real private investment expenditure among larger SuperNet communities. This indicates the Internet spurs entrepreneurial activities by enabling agglomeration across areas with a pre-existing (pre-SuperNet) cluster of entrepreneurial activities. However, there was a decrease in investment among smaller SuperNet communities with fewer than 10,000 residents. As well, among more geographically remote communities (more than 150 kilometers from a major city), there was a decrease in investment among SuperNet communities with less than 30,000 residents. This indicates that for small rural communities, the Internet enables consumption of items and services not produced within the local community (and typically produced at a lower cost than that which is possible in the local community), and discourages entrepreneurial activities among communities that lack a pre-existing (pre-SuperNet) entrepreneurial cluster. Overall, the data are consistent with the view that virtual entrepreneurial clusters are not independent of real entrepreneurial clusters.