How Does Digital Economy Promote the Geographical Agglomeration of Manufacturing Industry?

Abstract

With the acceleration of informatization, the spatial layout of economic activities has gradually shifted from “transportation cost + labor force” to “information + technology”. As a new generation of information, the digital economy has a profound impact on the spatial layout of the manufacturing industry. Based on the data of China’s listed manufacturing companies from 2001 to 2020, this paper aims to assess the effect of the digital economy on manufacturing agglomeration and identify the transmission mechanism of this effect. The results show the following: (1) The digital economy significantly promotes the geographical agglomeration of the manufacturing industry, which is still valid on the basis of a series of robustness and endogeneity tests. (2) Mechanism analysis shows that the digital economy promotes manufacturing agglomeration by reducing transaction costs, increasing market potential and enhancing knowledge spillover. (3) Heterogeneity analysis shows that the effect is more significant in the samples of large enterprises, high-tech manufacturing, central and western regions, small and medium-sized cities and the west side of the “Hu Huanyong Line”, which will greatly help the layout of the manufacturing industry break through the “Hu Huanyong Line” to achieve balanced development. (4) Globalization, localization and human capital play a significant positive moderating role in the process. This paper provides microevidence for the integration of digitalization and industrialization. Furthermore, it has important implications for the formulation of digital economy policy, the high-quality development of the manufacturing industry and the continuous promotion of regional coordinated development.