Internet Infrastructure and Industrial Development in China

Abstract

There has been growing attraction over the dramatically rapid industrial development in China from 2000 onwards. We use county-level panel data over the period 2001-2007 to shed light on the effect of internet infrastructure on the enhancement of industry performance among regions. We find that the popularization of internet significantly promotes the development of industry. This paper also indicates a novel implementation of instrumental variable and finds this effect are robust. Moreover, this paper explores some potential mechanism which may moderate this impact, and finds weak evidence of siphon effect through which the further the counties are away from their central cities, the greater the counties can benefit from the internet.