How the Rural Digital Economy Helps Farmers Share in Prosperity: Evidence from China

What is it about?

This study investigates whether—and how—the rural digital economy advances shared prosperity among farmers in China. Using a balanced provincial panel for 2013–2022, we estimate fixed-effects models to identify the effect of rural digital development on inclusive outcomes. To uncover the transmission, we adopt a mediation framework that tests whether high-quality agricultural development (HQAD) converts digital inputs into broad-based benefits. Robustness is assessed via lagged specifications, alternative indicators for digitalization and prosperity, and sub-sample analyses that examine regional structure and baseline conditions. Findings are threefold. First, rural digital development significantly promotes farmers’ shared prosperity. Second, the impact strengthens as digital infrastructure and services deepen, producing a U-shaped trajectory over the development cycle: early gains may be limited, but once platforms, data, and service ecosystems mature, the capacity to generate equitable benefits rises markedly. Third, mechanism tests confirm that HQAD mediates the effect—by improving production efficiency, market connectivity, quality standards, and value-chain coordination—so that digital progress translates into sustained, widely shared improvements. Pronounced regional heterogeneity also appears: western provinces show stronger effects than eastern ones, consistent with larger marginal returns where digital and agricultural modernization gaps are wider. Methodologically, the paper combines a DID-style identification logic within a fixed-effects setting with formal mediation tests, separating direct digital effects from the HQAD transmission path. Substantively, it links infrastructure, services, and agricultural upgrading to inclusive welfare outcomes. The study clarifies what digitalization does (raise shared prosperity), how it works (through HQAD), and where it works most (lagging regions), providing a coherent account of digital inclusion in rural China.

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Photo by Anton Riyadi on Unsplash

Photo by Anton Riyadi on Unsplash

Why is it important?

This study matters for both science and policy. Empirically, evidence on whether rural digitalization delivers inclusive benefits has been scarce. Using provincial panel data with a clear identification strategy and mediation tests, the paper shows that digital development raises farmers’ shared prosperity and explains why: it works through high-quality agricultural development (HQAD), which improves production practices, market access, and value-chain coordination. The U-shaped pattern clarifies why early digital investments may yield modest gains—benefits accelerate once infrastructure, platforms, and services reach functional scale. Policywise, the results imply that digital programs are not only connectivity projects; they become inclusion policies when paired with HQAD. Prioritizing underdeveloped western provinces can generate larger marginal returns, while sustained investment in service ecosystems (extension, e-commerce, logistics, finance, data) is needed to move regions from low-return early stages to high-return maturity. The evidence argues against one-size-fits-all rollouts and supports context-specific design—calibrating digital spending with agricultural quality upgrading and institutional capacity. Internationally, the study offers a transferable framework for low- and middle-income countries seeking to turn digital penetration into equitable rural gains, contributing to debates on digital inclusion, rural revitalization, and food-system sustainability.

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