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Abstract

The diffusion of e-commerce has played a significant role in recent rural economic development in China. E-commerce is also considered as an efficient channel to alleviate poverty in rural China. Voluminous studies have investigated the contribution of e-commerce to agricultural development, yet it is lacking empirical evidence as to the effects of e-commerce on rural poverty alleviation. Since the year of 2014, in order to develop rural e-commerce, Chinese government launched the National Rural E-commerce Comprehensive Demonstration Project. This gradual involvement policy offered a natural experiment for evaluation of e-commerce. Based on village-level survey data from rural China and Heckit method, our study finds that rural e-commerce has a significantly positive effect on rural income. Moreover, the effect is inverted U-shaped for the relative-poverty villages. The estimation of the propensity scores matching model confirms that the results are robust. The following policy recommendations are proposed: (1) policy support to rural e-commerce should prioritize the poverty-stricken villages. By doing so, the marginal income effects of e-commerce will be maximized. (2) Investment in internet infrastructure and establishment of human resources for e-commerce in rural areas will have spillover effects, increasing rural income through the “digital dividend”.

۱٫ Introduction

Since 1978, China has lifted more than 700 million people out of poverty. China was the first developing country that achieved the Millennium Development Goal for poverty alleviation set by the United Nations (Liu et al. 2019). Although the Chinese government has prioritized policies that target at improving rural residents’ welfare, poverty remains a critical problem with 16.6 million people estimated to live in poverty and an poverty incidence rate of 1.7% in 2018 (NBSC 2019). Poverty alleviation remains a massive task for the Chinese government, which is determined to eradicate absolute poverty by 2020.

Thanks to the development of information technology and increasing use of smartphones in rural areas, e-commerce penetration in the rural economy has been on the rise in recent years. Rural e-commerce is a direct approach to take advantage of information technology and achieve higher profits. It adapts to the requirements of rural industrial transformation and upgrade. By doing so, it provides new drivers for the revitalization of rural industry. In recent years, “empowerment” to players of rural e-commerce has also attracted much attention (Ogutu et al. 2014; Leong et al. 2016; Zeng et al. 2018). In these literature, rural e-commerce was considered as an efficient tool to enable people to develop modern agriculture and commerce. Especially, e-commerce promoted agricultural value chain development and commodity circulation (Baorakis et al. 2002; Mintert 2003; Jalali et al. 2011; Parker et al. 2016; Song et al. 2019). E-commerce, unlike traditional commerce in which employees need to be present in stores, enables its staff to work from home. It is a highly accessible form of offfarm work for those constrained in rural areas due to either agricultural production or caring responsibilities. In some rural areas, e-commerce has become a potential engine for farmers’ income growth. As an innovative solution, poverty alleviation through e-commerce began to emerge.