Internet use and technical efficiency of grain production in China: a bias-corrected stochastic frontier model

Abstract

Internet technology has unique advantages, such as rich information, rapid dissemination, and overcoming spatial limitations. It is considered an effective approach to promote agricultural technology application and enhance agricultural technical efficiency. However, it is still unclear how Internet use affects the technical efficiency of smallholders in grain production. Based on the grain production data of 1699 smallholders in China, this study uses the bias-corrected stochastic production frontier and propensity score matching to obtain an unbiased estimate of the impact of Internet use on technical efficiency and examines its channels of action. The empirical results indicate that the decision of households to use the Internet is influenced by the individual characteristics of the household head, household characteristics, and village characteristics. The age of the household head has a significant negative impact on Internet use, while the education level and health status of the household head, household income and size, and the topography of the village have significant positive effects on Internet use. We also find that Internet use has a statistically significant positive effect on technical efficiency, and the selection bias leads us to underestimate this effect. Furthermore, we verified the channels of Internet use affect technical efficiency by alleviating financial constraints, broadening social capital, and improving the level of mechanization. Therefore, policymakers must strengthen the construction of Internet infrastructure in rural areas and improve the Internet penetration rate in rural areas. Furthermore, policymakers can establish technical training centers to help farmers learn Internet technology and new agricultural production techniques. Lastly, policymakers can collaborate with banks, research institutions, cooperatives, agricultural enterprises, and other entities to develop diverse policy measures that provide farmers with financial support, technology assistance, and production services.