Space–time exploration of the east–west gap in economic development and digital financial inclusion: evidence from China pre and post-COVID-19

Abstract

The East–West imbalance in China’s economic development has profoundly affected all aspects of society, but the emergence of digital financial inclusion offers potential opportunities to address this issue. This study examines 31 provinces in China from 2011 to 2020, and Exploratory Space–time Data Analysis is employed to specify the temporal and spatial changes in the East–West disparity in economic development and digital financial inclusion. The main findings are: First, inequality in economic development is associated with a decline in spatial autocorrelation. With the acute exacerbation of inequalities after the pandemic, enhancing spatial dependence through regional cooperation would be conducive to reducing disparities. Second, economic development, digital financial inclusion, and its components (usage and coverage) have hot spots in the East and cold spots in the West. Before the pandemic, significant advancements in the West mitigated the East–West gap, but the East–West divergence in economic development worsened after the COVID-19 explosion. Third, distinct from economic development, digital financial inclusion and its key elements (usage) not only have a growing regional dependence, but also that the pandemic has not disrupted improvements in the West. More importantly, there is a significant regional overlap between digital financial inclusion, usage, and economic development, implying spatial and attributable connections among them. Consequently, governments should consider digital financial inclusion as a policy tool to relieve the worsening inequality in economic development between the East and West during the post-pandemic stage.