Beyond market access: service localization, village collectives and the differentiated adoption of agricultural technology in China

This study examines how service localization influences the adoption of agricultural machinery services (AMS) in China, where a significant structural shift from cross-regional to localized service providers has transformed rural agricultural markets. Drawing on data from the China Land Economic Survey of 3,586 households across 26 counties in Jiangsu Province, we investigate the mechanisms through which localized services shape farmers’ adoption decisions. Using an instrumental variable to address the endogeneity problem, we find that service localization increases AMS adoption probability by 0.490% points and a 0.516 increase in the number of AMS stages. Our analysis reveals important heterogeneous effects: service localization has a stronger impact on ordinary farmers compared to large-scale operators and is more influential for land-saving stages than labour-saving operations. Additionally, we find that village collectives play a crucial moderating role by enhancing the effectiveness of localized services through resource pooling and service coordination. These findings carry significant policy implications for promoting agricultural mechanization in developing economies. We propose targeted interventions to strengthen localized service markets, enhance the capabilities of village collectives and ensure affordable, efficient agricultural mechanization in rural China.