Does internet use improve technical efficiency of banana production in China? Evidence from a selectivity-corrected analysis

Abstract

Although many studies have analyzed the Internet use effects on farm performance and rural development, little is known about the relationship between Internet use and technical efficiency (TE) of crop production. This paper fills the gap by analyzing the impact of Internet use on the TE of banana production in China, using an innovative approach that combines a propensity score matching technique with Greene’s (2010) selectivity-corrected stochastic frontier model to address selectivity bias. We employ both the fractional regression (FR) model and the unconditional quantile regression (UQR) model to, respectively, investigate the homogeneous and heterogeneous TE effects of Internet use and other control variables. After correcting for selectivity bias stemming from both observed and unobserved factors, we show that the TE scores of Internet users and nonusers are 0.571 and 0.537, respectively. The results of the FR model show that Internet use exerts a homogeneous positive impact on TE of banana production. In contrast, the UQR results reveal that TE effects of Internet use are heterogeneous, and the Internet users at the lower TE quantiles receive higher TE than their counterparts at higher TE quantiles. Our findings underscore the importance of promoting Internet use in rural areas to boost farm performance.