5G: Next-generation tech for long-term economic growth


The past two decades has seen mobile technology progress from a people-to-people technology (3G) to people-to-information connectivity (4G). While this step revolutionized how people communicate and conduct commerce, the next generation of mobile technology — 5G — promises far greater technological and economic transformations with the potential to reshape industrial and consumer activity.

In January, IHS Markit, where I am the chief economist, released a study assessing the economic impact of the introduction and adoption worldwide of 5G as the next generation of mobile technology. According to our report, 5G will be a technology platform for innovation in virtually every industrial sector, from automotive to healthcare. As a result, this new technology, successfully implemented, will have a profound impact on the U.S. and global economy and will be a catalyst for innovation of goods, services and business models that evolve and emerge over the next two decades.

Let’s take a step back, as many people speak of 5G, but are unaware of what it will offer.

{mosads}This technology will strengthen and expand the current mobile technology platform with greater ubiquity, lower latency and more adaptability to a range of uses. Its growth across industries and processes where wireless currently has limited penetration will position mobile technologies for a deep and sustained impact across a broad range of sectors.


Economic growth proceeds as a direct result of our investments in capital and productive capacity, increases in the size and quality of the labor force, and productivity gains in the utilization of that capital and labor. The latter factor is critical now.

The rate of measured productivity growth has disappointed since the technology-fuelled gains of the 1990s. 5G technology offers the promise of spurring further technological gains enabled by the revolution in information technology.

The 5G value chain will, in our estimation, invest hundreds of billions over the coming decade to continually expand and strengthen the 5G technology base. To put the 5G investment figure in context with another hot infrastructure topic, President Trump’s infrastructure proposal optimistically foresees an additional $100 billion each year in new infrastructure spending for roads, bridges and ports.

With this investment and the resulting technology capabilities, 5G deployment will fuel sustainable long-term growth to global real GDP. According to our report, from 2020 to 2035 the total contribution of 5G to real global GDP will be more than $2 trillion, equivalent to an economy the size of India — currently the seventh largest economy in the world.

For the period 2020 to 2035, IHS Markit forecasts global real GDP will grow at an annual rate of 2.9 percent, of which 5G will contribute 0.2 percent of that growth.

Ultimately, the test of any investment is how much it improves the quality of life globally. For instance, here in the U.S. 5G enabled advances in telehealth will help to deliver more innovative and effective care to underserved rural populations, help to meet the increasingly complex healthcare needs of our veterans, and catalyze new efficiencies that can drive healthcare costs down in the future. Internationally, where rapid urbanization in megacities around the world presents significant economic and social challenges, 5G holds the promise of more effective, efficient, and greener deployment of critically needed power, public safety, and transportation infrastructure.

The IHS Markit analysis documents how 5G technology will improve the ability for people and machines to interact with each other and more quickly share information to achieve a greater economic return on their time and capital in pursuit of personal and professional goals and outcomes. The economic effect of new investment, research and development, and technology innovation alone indicates 5G will have a profound and sustained impact on global growth.

To realize this potential, our government should encourage and facilitate research and development investments by providing a clarity of regulatory and intellectual property policy adaptable to the fast pace of technological advance. An innovation policy which enables the implementation and diffusion of 5G across the economy will unleash these gains in social and economic welfare here in the U.S. and around the globe.

Nariman Behravesh is the chief economist at IHS Markit, an analytics and data provider.

The views expressed by contributors are their own and are not the views of The Hill.


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