How local investment and broadband shape where digital businesses emerge.
Digital technologies have made it easier to start and run a business from almost anywhere, but those opportunities remain unevenly distributed. As communities invest in broadband, entrepreneurship, and regional growth, local conditions play a central role in shaping who can participate in the digital economy.
In a new article, I examine how Community Development Block Grant investments relate to digital entrepreneurial activity in low- and moderate-income communities. The analysis uses ZIP code-level data on CDBG spending and commercial domain registrations from the GoDaddy Small Business Research Lab. The CDBG program is a long-running federal grant that provides flexible funding to local governments to support community and economic development. Domain data captures a wide range of small and home-based business activity often missed in traditional measures.
What the data shows: CDBG investments were associated with higher levels of digital entrepreneurship in areas with stronger broadband adoption. Infrastructure investments showed the most consistent positive relationships, and direct financial assistance for small businesses was consistently associated with higher levels of digital activity. Other categories, including public and business services, showed more variation depending on local context. The findings also point to the importance of housing stability and community services, as many digital businesses operate from home and depend on reliable connectivity.
The takeaway: Targeted local interventions can support digital entrepreneurship, although their effects depend in part on local digital infrastructure and capacity. Coordinating investments across broadband, business support, and community services can help strengthen local participation in the digital economy.
A full version of this research is forthcoming in Economic Development Quarterly.