The impact of the Internet on inequality and economic growth is controversial, and there is a lack of evidence on balancing efficiency and fairness. We present a framework that examines the interconnections between the Internet, urban-rural gap, and economic growth, and then empirically test using data from 297 cities in China from 2001 to 2019. We find that the Internet significantly reduces both the urban-rural income gap and the consumption gap, and the Internet helps mitigate the negative impact of widening income and consumption gaps on economic development. Our empirical findings provide important insights for developing countries to achieve inclusive growth through enhanced digitalization.
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