UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

number of employees in the second half of the eighties fostered economic growth. The
lagged stock of patents and the real license expenditures had in most cases a moderate
influence on growth. Nevertheless, these two sources of technical progress account for
slightly more than 12 % of the total increase of gross value-added. Their share increases
even to 27.5 % in the second half of the eighties, mainly due to the strong increase
of real license expenditures.
Altogether, the results suggest that the considered sources of technical progress
as well as the increasing requirement for information and communication contribute
substantially to economic growth in West Germany.
4.2 Growth and Employment Effects of an Internet Flat Rate in Germany
The second study was concerned with the impact of an Internet flat rate on growth and
employment in Germany (WELFENS / JUNGMITTAG, 2000). The starting point of
this study was the fact that the dissemination of knowledge and the efficient information
sharing that results from it are of central importance to economic growth. Assuming
that (given a liberal regulatory environment) Internet use will become a means of
knowledge dissemination in the middle and long term – at low rates determined by
common sense or by competition – and will contribute to growth on a similar scale as
telecommunications, then – going back to the elasticities assessment in JUNGMITTAG
/ WELFENS (1998) – a one percent increase in knowledge dissemination via the Internet
would drive economic growth in the corporate sector (excluding the atypical sectors
of agriculture and forestry, fishing and residential rentals) up by a good 0.18 percent.
The accelerated information sharing associated with increasingly intensive telecommunications
network use in the latter half of the 20 th century has had positive diffusion
effects on product and process innovation. At times, there has been accelerated demand
for telecommunications based on network effects. For existing telecom users in the
corporate sector, the user value of telecommunications rose as other companies increasingly
availed themselves of modern telecommunications services such as fax and
ISDN. In the case of Internet use, which is still at an early expansion stage in Germany,
there are most likely considerable positive network effects to be realized. Moreover, the
Internet is a novel way to link creative potential in the household, corporate and science
sectors, thus promoting innovation.
40