The impact of Internet on consumption: A local factors approach

The study is based on theoretical and empirical studies on the role of the internet in consumption and related factors. This paper synthesizes the channels through which the Internet influences consumption and analyzes the factors affecting this relationship. Methodology adopted for this research is an empirical approach. We estimate the model using panel data through Fixed Effect Model Estimations The panel data is collected annually for 63 provinces in Vietnam. The data is sourced from the Statistical Yearbook and VCCI. The results obtained revealed the positive impact of the internet on consumption. The results indicate that the impact of the internet becomes stronger with the Mobile Internet. The paper finds that the internet plays a more significant role in urban areas compared to rural ones. It also shows that effective local governance positively influences the relationship between internet and consumption. The paper offers the first evidence that local factors, including the macroeconomic, institutional and social variables, are determinants of consumption in the context of Internet development.