Place-based polices and e-commerce development in rural China

Abstract

This paper estimates the effects of a prominent place-based policy in rural areas of China, the Rural E-commerce Demonstration Counties (henceforth REDC), on the local e-commerce development. Relying on plausible exogenous variation in place-based policies caused by the staggered implementation of REDC and a difference-in-differences approach, we show that the REDC program has significantly increased the start-up of online business entities and helped them to survive. We also observe that the REDC program plays a positive role in improving logistics infrastructure and nurturing relevant talents. Moreover, we find that remote counties and counties with smaller market potential benefits more from the REDC program. Further analysis finds that the REDC program also has a positive impact on the scale of e-commerce, business, and local labor market. This paper provides new evidence on the positive effects of place-based policies on local development.