Does digital transformation promote economic resilience? Urban-level evidence from China

Abstract

Improving economic resilience has become a regional development goal of policymakers. This study aims to investigate the effects of digital transformation on urban economic resilience and its underlying mechanisms. Based on a sample of 287 prefecture-level cities in China, We find that digital transformation helps improve urban economic resilience, which is robust to different estimations, e.g., 2SLS and staggered DID. Additionally, further analysis indicates that improving the efficiency and stimulating the level of innovation that is associated with digital transformation are likely to be the main mechanisms behind this effect. Our results reveal the following several policy implications. Firstly, formulating policies to develop digital technology and to promote its application is of great significance for achieving a sustainable and resilient economic growth in an increasingly uncertain environment. Secondly, the government should focus on promoting market-oriented reform, reducing government intervention, protecting intellectual property rights, and creating an innovative environment to maximize the effect of digital technology. Thirdly, during the normal periods, accelerating the digitalization process will promote the balanced development among urbans.