Connecting the Countryside via E-Commerce: Evidence from China†

AER: Insights 2021, 3(1): 35–50 https://doi.org/10.1257/aeri.20190382 Connecting the Countryside via E-Commerce: Evidence from China By Victor Couture, Benjamin Faber, Yizhen Gu, and Lizhi Liu* This paper estimates the impact of the first nationwide e-commerce expansion program on rural households. To do so, we combine a ran- domized control trial with new survey and administrative microdata. In contrast to existing case studies, we find little evidence for income gains to rural producers and workers. Instead, the gains are driven by a reduction in cost of living for a minority of rural households that tend to be younger, richer, and in more remote markets. These effects are mainly due to overcoming logistical barriers to e-commer ce rather than additional investments to adapt e-commerce to the rural population. (JEL I31, L81, O12, O18, P25, P36) The number of people buying and selling products online in China has grown from practically zero in the year 2000 to more than 400 million by 2015, surpass- Most of this growth has ing the United States as the lar e-commerce mark gest et. taken place in cities, but the Chinese government recently announced the expansion of e-commerce to the countryside as a national polic y priority. The objective is to foster rural economic development and reduce the rural-urban economic di vide. Other developing countries with large rural populations, such as Egypt, India, and Vietnam, have recently announced similar e-commerce e xpansion plans. These policies have been motivated by a growing number of case studies on highly successful “ e-commerce villages” that ha ve experienced rapid output growth * Couture: Vancouver School of Economics, University of British Columbia (email: victor.couture@ubc. ca); Faber: Department of Economics, UC Berkeley, and NBER (email: benfaber@econ.berkeley.edu); Gu: HSBC Business School, Peking University (email: yizhengu@phbs.pku.edu.cn); Liu: McDonough School of Business,...