THE DIGITAL ECONOMY IS A CATALYST FOR TOTAL FACTOR PRODUCTIVITY GROWTH

Based on data including the provincial TFP calculated using the dual approach and the digital economy index proposed by the principal component analysis in this paper, this study used pooled regression to examine the innovation-driven effects of digital economy on total factor productivity (TFP) in China. The findings suggest that the digital economy index has a positively nonlinear connection with province TFP, demonstrating that the digital economy serves as an innovation catalyst for TFP's broad and long-term development. Nonetheless, there is regional variation in that digital integration promotes high-quality TFP growth in eastern China, but it is substantially inferior in the middle and western areas. The findings serve as helpful reference materials for the departments concerned in their efforts to overcome regional technical information barriers, establish a cooperation program, and build a decentralized infrastructure.

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