Impact of Digital Economy on Inter-Regional Trade: An Empirical Analysis in China

Abstract

Unimpeded domestic inter-regional trade is an inevitable choice for a country to improve its economic development autonomy and internal stability. The booming development of the digital economy profoundly affects inter-regional trade exchanges and the construction of domestic trade patterns. Based on China’s inter-provincial panel data, this study analyzes the mechanism channels and regional heterogeneity of the digital economy’s impact on inter-regional trade. We found that firstly, the digital economy significantly promotes inter-regional trade outflows and inflows with positive spatial spillover effects. Secondly, the digital economy promotes inter-regional trade by reducing trade costs and stimulating market demand, while the role of the resource allocation effect and technological innovation effect needs to be enhanced. Thirdly, the promotion of inter-regional trade by the digital economy is more prominent and has the potential for less developed regions or non-border regions. In addition, the digital economy significantly boosts inter-regional trade in labor-intensive regions, while it has a limited effect on inter-regional trade in technology-intensive regions. Therefore, this study suggests increasing the construction of digital infrastructure in less developed regions, tapping the role of the digital economy in resource allocation, and promoting the in-depth integration of the digital economy with the region’s advantageous industries, so as to promote inter-regional trade and economic development.