Can the Internet narrow regional economic disparities?

Abstract

Using city-level data from China for the period 2003–15, this paper studies how the Internet affects economic disparities between cities through its heterogeneous impact on the economic growth of cities with different penetration rates and population sizes. The results show that the Internet widens the economic disparities between cities with low Internet penetration rates and cities with high Internet penetration rates, and even if the penetration gap between cities is bridged in the future, the Internet will still widen the economic gap between large and small cities due to the reinforcing effect of city size.