Distribution dynamics and quantile dynamic convergence of the digital economy: Prefecture-level evidence in China

Abstract

The digital-substantive fusion is the realistic need to crack the problem of “out of the real to the virtual” in the real economy. Based on the panel data of 288 prefecture-level cities in China from 2011 to 2019, we use kernel density estimation and quantile convergence model to explore the distribution dynamics and convergence trend of the digital economy across the country and in the eastern, central, and western regions. In doing so, we unearth several key findings. First, the development of the digital economy in Chinese cities is on the rise, but absolute differences among cities still exist. Second, the overall development of the digital economy exhibits a dynamic q-σ convergence trend, but the development of the digital economy in the central region from the 0.75 to 0.95 quantiles shows a divergence trend. Third, our analysis reveals quantile heterogeneity and regional heterogeneity in the dynamic absolute q-β convergence of digital economy development. The tendency to converge is stronger in the extreme quantile regions than in other regions, while the convergence speed of central and western regions is higher than that of eastern regions. Finally, the dynamic conditional q-β convergence trend of digital economy development across the country and in the eastern, central, and western regions is stronger than the dynamic absolute q-β convergence, with the trend of convergence weakening only in the eastern high quantile regions. These findings provide empirical evidence for promoting regional coordinated high-quality development of digital economy, as well as theoretical references for vigorously promoting the construction of a modernized industrial system and accelerating the development of new-quality productive forces.