From pixels to prosperity: does the digital economy reinforce or mitigate urban economic convergence in China?

Abstract

ABSTRACT In an era where the digital economy is reshaping global economic landscapes, its impact on urban economic convergence remains a subject of considerable debate. This study delves into the intricate relationship between the digital economy and urban economic convergence across 337 prefecture-level cities in China from 2006 to 2020, a critical area of research given the country’s rapid digitalization and urban development. Using the β-convergence model, our findings reveal a general trend of economic convergence among cities, with the digital economy both facilitating and hindering this process. In addition, the impact of the digital economy on urban economic convergence is found to be heterogeneous, significantly influenced by the levels of human and physical capital and the extent of digitalization within cities. This heterogeneity underscores the presence of a ‘digital divide’, where the benefits and challenges of digitalization are not uniformly experienced across urban centres. Conclusively, we recommend targeted policy interventions to bridge the digital divide, enhancing digital literacy, and developing digital infrastructure in underdeveloped urban regions. Such targeted measures are essential for ensuring that the digital economy serves as a catalyst for equitable and sustainable urban development across China’s diverse urban landscape.