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.

Digital Economy and the Sustainable Development of China’s Manufacturing Industry: From the Perspective of Industry Performance and Green Development

“…Thirdly, in terms of financial management, data-based Internet supply chain finance can effectively facilitate enterprise financing channels and reduce financing costs for manufacturing SMEs by replacing traditional mortgage-backed financing with data transaction pledges. Finally, digital technology can also enhance the innovation capability of firms from the perspective of information collection and resource integration [41].…”

How Can the Development of Digital Economy Empower Green Transformation and Upgrading of the Manufacturing Industry?—A Quasi-Natural Experiment Based on the National Big Data Comprehensive Pilot Zone in China

“…In recent years, some scholars have begun to conduct some exploratory studies on the role of the digital economy in promoting the transformation and upgrading of the manufacturing industry. Some scholars discussed the driving role of the digital economy in the green development of the manufacturing industry from the perspectives of industry performance [20], geographical agglomeration [21], and global value chain [22]. Cai Yanze et al (2021) and Yu Donghua and Wang Meijuan (2022), respectively, introduced factors such as innovation environment and entrepreneurship to analyze the mechanism of the digital economy on manufacturing upgrading [23,24].…”

The New Geography of Manufacturing in China: The Internet and Manufacturing Agglomeration

“…The Internet enhances market potential by reducing transaction costs [19]. Specifically, the Internet attracts consumers and manufacturers to concentrate on digital platforms, which leads to a better matching of supply and demand [27]. For example, suppliers in remote areas can match their consumers on the platform, and consumers in remote areas can buy goods from the central area on the platform, which greatly weakens the transaction cost generated by geographical distance and enhances the market potential.…”

“…Inserting Equation (27) into Equation ( 28), we obtain a non-linear first-stage estimation. From the first-stage estimation, we can get the predicted values of the Internet (BP) BP, while squaring BP to get B P2, which is regarded as the predicted values of BP2.…”

“…Second, this paper deepens the understanding of the Internet's impact on manufacturing agglomeration. The previous literature has paid more attention to the linear effect of the Internet on manufacturing agglomeration [6,27]. However, the current rapid diffusion and penetration of Internet technology have triggered network effects, making its nonlinear impact on economic activities more pronounced [14].…”