ICT adoption, commercial orientation and productivity: Understanding the digital divide in Rural China

Abstract

This study investigates the impact of Chinese smallholders’ adoption of Information and Communication Technologies—the use of smartphones and computers connected to the internet—on their commercial orientation, land, and labor productivity. Commercial orientation is the share of farm output for sales in the market. We used a control function approach and a selectivity-corrected model. The study uses national survey data from rural sample households, the China Household Database, and the China Household Finance Survey and Research Center. Findings reveal that the adoption of information and communication technologies by Chinese farmers increased the commercial orientation of farming. Furthermore, adopting information and communication technologies increases land and labor productivity by about 21.3 % and 28.2 %, respectively. Farm households’ commercial orientation improved labor productivity by about 35.9 %. Heterogeneity indicates that the adoption of information and communication technologies has a more significant effect on improving productivity for young household heads and small farmers. Policymakers should establish information and communication technologies training programs, develop digital infrastructure, and promote smallholder commercial production to increase agricultural productivity.