An Empirical Study on the Digital Economy, Fiscal Policy, and Regional Sustainable Development—Based on Data from Less Developed Regions in China

Abstract

Reducing inequality within and between countries and enhancing social welfare are important components of the United Nations’ sustainable development goals. Based on the experience of developed countries or regions, the digital economy and fiscal policy are effective ways of promoting inclusive regional economic growth. Fully considering the completeness and availability of the data, we select the data of China’s less developed regions from 2001 to 2011 for empirical testing. This study empirically examined the effect of the digital economy on regional sustainable development and the underlying mechanism, taking an analysis of the regulatory effect of fiscal policy into account. The results show the following: (1) The digital economy and regional sustainable development exhibit an inverted “U” curve relationship. In the early stage of development, relying on its own economies of scale, the digital economy releases the “digital dividend”, positively affecting the sustainable development of the regional economy; in the later stage, the “digital divide” has a positive impact on the development of the regional economy. The inhibitory effect of the “digital divide” is greater than the enhancement effect of the “digital dividend”, negatively affecting the sustainable development of regional economies. (2) There is regional heterogeneity in the mechanism of the effect of the digital economy on regional sustainable development. The digital economy affects the level of regional sustainable development through the two paths of “comprehensive prosperity” and “holistic well-being”. For the samples in the eastern and western regions, the digital economy plays the role of promoting and then inhibiting, while for the samples in the central region, it plays the role of inhibiting and then promoting. (3) Fiscal policy negatively regulates the effect of the digital economy on regional sustainable development, but the regulatory effect is not significant.