How Does the Digital Economy Affect Green Development?—Evidence from 284 Cities in China

Abstract

The expansion of the digital economy has resulted in extensive changes to production factors, production methods, and lifestyles, making it a key factor in green development. In a unified framework, this paper examines the impact of China’s digital economy on green development and the transmission mechanisms of the digital economy. Based on a theoretical analysis of the green attributes and transmission mechanisms of the digital economy, the relationship is empirically examined using the fixed effects model, the instrumental variables method, the quantile regression model, and the mediating effects model with China-specific data from 2011 to 2019. The results indicate that the digital economy has a significant positive impact on green development, and that this impact grows as GTFP (Green Total Factor Productivity) increases. The digital economy has a lasting impact. According to the analysis of heterogeneity, the impact of the digital economy varies significantly between regions, and this disparity exists in both small and large cities. The “digital gap” between high- and low-level cities exacerbates the disparity in the digital economy’s effects. The mechanism analysis reveals that industrial structure rationalization and environmental improvement are the primary means by which the digital economy’s effects are transmitted. Currently, the “innovation-to-application” conversion efficiency is low, and the “demand expansion effect” is greater than the “efficiency enhancement effect”, which impedes the transmission path of green technology innovation and energy use efficiency. The research findings serve as a guide for promoting the development of Digital China and accelerating the green transformation.