Digital technology and manufacturing industrial change: Evidence from the Chinese manufacturing industry

Abstract

This study utilized data from 2011 to 2020 across 29 manufacturing industries in China to comprehensively analyze the macro-level impact of digital technology applications on industrial transformation. The main findings are as follows: Firstly, a significant positive correlation between digital technology application and industrial change was observed, with an average effect of 1.2128 and statistical significance (α = 1 %). In specific sectors such as textile manufacturing, resource processing, and machinery equipment manufacturing, the positive influence of digital technology on industrial transformation is evident, with respective effects of 1.2088, 1.0934, and 1.1737-all statistically significant (α = 1 %). Secondly, examining heterogeneity among different manufacturing industries revealed that process manufacturing and labor-intensive sectors exhibited more pronounced responses to digital technology, with impact coefficients of 1.2189 and 1.2784, both significant (α = 1 %). Robustness tests confirmed the reliability of these results, demonstrating that the positive relationship between digital technology application and industrial change remained robust even after addressing endogeneity concerns. Lastly, a mechanism analysis uncovered the pivotal roles of innovation mechanisms, talent effects, and government institutional arrangements in the digital technology-driven industrial transformation. Notably, the machinery and equipment manufacturing industry displayed a significant positive correlation with the innovation mechanism, with a coefficient of 3.8344. The resource processing industry showed a positive impact associated with the talent effect, with a coefficient of 0.0002. However, in the textile manufacturing and machinery and equipment manufacturing sectors, government institutional arrangements were negatively correlated with industry performance, with coefficients of −0.0056 and −0.0096, respectively. Overall, these findings offer valuable insights into how digital technology shapes the transformation of the manufacturing industry, holding great theoretical and practical significance for guiding the industry's digital transformation efforts.