Does Internet Access Matter for Rural Industry? A Case Study of Jiangsu, China

Abstract

This study examines the digital divide in rural Jiangsu, one of the most developed areas in China. First, it reveals that only a small portion of rural enterprises have access to the Internet, and the penetration rate of the Internet in rural enterprises of China is much lower than that in urban enterprises revealed by previous studies. Second, a significant digital divide exists between Southern Jiangsu on the one hand and Middle and Northern Jiangsu on the other hand. Indeed, the Internet penetration rate in Zhangjiagang is very close to that in urban enterprises. Thirdly, this study finds that large and old enterprises are more likely to have access to the Internet. Fourthly, Internet access demonstrates very strong and positive relationships with enterprises' economic and innovative performance, though it is not clear whether or not the better performance at rural enterprises with Internet access comes from their usage of the Internet. The implication of the study is that governments should promote Internet usage among rural enterprises.

Keywords: Internet, Rural industry, Jiangsu, China

JEL Classification: O18, O32, O53