The impact of the digital economy on urban total factor productivity: mechanisms and spatial spillover effects

Abstract

Digital economy is the indispensable pathway for driving industrial structural upgrading and fostering innovation and entrepreneurship in cities, ultimately facilitating China's economic transformation. Simultaneously, the enhancement of urban total factor productivity (TFP) serves as a crucial means to achieve high-quality economic development in cities. This study examines the specific impact of the digital economy on urban TFP using a panel data model with a sample of 285 Chinese prefecture-level cities from 2011 to 2019. Additionally, it employs a mediation effect model to test the mechanisms through which the digital economy influences urban TFP and utilizes a spatial Durbin model to analyze the spatial spillover effects of the digital economy on urban TFP. The research findings reveal the following key points: (1)The digital economy has an overall significantly positive impact on urban TFP. (2)The digital economy indirectly promotes urban TFP by encouraging the advancement of industrial structure and fostering innovation and entrepreneurship in cities. (3)The influence of the digital economy on urban TFP exhibits spatial spillover effects, where the digital economy in neighboring cities significantly enhances the TFP growth of local cities.The results of this study contribute to elucidating the mechanistic pathways through which the digital economy affects urban TFP, holding significant practical implications for achieving high-quality economic development in urban areas.