<p>This study assesses the economic impact of broadband in an emerging nation. Drawing from the wealth of research literature on economic effects generated on the basis of cross-sectional analyses (e.g. for OECD, Latin America and Arab States), it applies econometric tools and techniques to measure the impact of broadband on the Panamanian economy. The Panamanian telecommunication sector accounts for 3.0% (or US $892 million) of the country’s Gross Domestic Product (GDP), directly contributing US $107 million annually to its economic growth, and generating 3.7% of total tax collections. In addition, the sector represents more than 1.2% of all employment (or some 15,900 direct jobs) in the country. The evidence suggests that fixed broadband has a significant economic impact in Panama. The model developed for the period 2000-2010 estimates that fixed broadband indirectly contributed 0.44% annually to GDP. Given the annual growth rate of the Panamanian economy at 4.6%, the indirect effects of fixed broadband usage contributed almost 9.6% of all economic growth in the country. Furthermore, since 2005 this impact has almost doubled reaching 0.82% of GDP and representing 11.3% of all economic growth. The increasing impact of fixed broadband on the Panamanian economy reflects the concept of increasing returns to scale experienced both in fixed and mobile networks across the world. The future of broadband in Panama is not only linked to fixed access. Current adoption of mobile broadband is split between mobile phones with access to the Internet and dedicated mobile broadband services (PCs connected through USB modems, aircards, etc.). The former account for almost 4.2% of per capita (Q4 2011)1 penetration, while the latter less than 0.05%. Adoption of dedicated mobile broadband offerings in Panama was scarce until 2010, suggesting an insignificant contribution on GDP growth. However, 45.4% of the Panamanian population is forecast to adopt mobile broadband connections by 20162 . Given the significant impact of fixed broadband, it is expected that mobile broadband will also contribute to the growth of the Panamanian economy. Additionally, the mobility attributes of 3G and LTE connections can help serve the rural and remote parts of the country, thereby reducing social exclusion, increasing digital literacy and connecting these areas to the rest of the world. Future challenges for Panama include applying the lessons learned from wireless voice services to fixed broadband, and by leveraging its highly competitive industry structure, to accelerate mobile broadband adoption. Wireless broadband represents the appropriate technological platform to meet this challenge. Its deployment will facilitate the development of domestic and export-oriented economic activity. In parallel, the development of applications in the areas of education, public health, media, entertainment and government services, will act as incentives to broadband adoption. </p>