DIGITAL ECONOMY AND INDUSTRIAL GREEN TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM CHINA

Abstract

Digital economy (DE) has emerged as a central catalyst for regional technological advancement, a renewed engine of economic expansion, and an essential pathway for achieving sustainable and low-carbon growth. This study develops a DE index using the CRITIC–TOPSIS approach based on panel data from 30 Chinese provinces spanning 2006–2023 and applies the Super-SBM model to measure industrial green total factor productivity (IGTFP). It systematically investigates both the underlying mechanisms and the spatial heterogeneity of the influence exerted by DE on IGTFP.  The empirical findings indicate that DE exerts a strong and statistically significant positive effect on IGTFP, with the most substantial contributions arising from digital industrialisation and platform-based activities. In contrast, digital innovation activities do not exhibit a discernible impact on improvements in green productivity. Further mechanism analysis demonstrates that DE promotes IGTFP primarily by facilitating industrial restructuring and accelerating green technological innovation. This effect is further amplified under stricter environmental regulation, as higher regulatory intensity is associated with greater gains in green productivity. Spatial analysis reveals pronounced regional disparities. Eastern and north-eastern provinces benefit most from digitalisation, whereas central and western regions experience constrained outcomes due to deficiencies in infrastructure and innovative capacity. Based on these results, the study concludes that strengthening digital platforms, advancing green technological innovation, and implementing stringent regulatory frameworks supported by effective governance can substantially enhance green productivity performance. Additionally, it advocates the formulation of region-specific policy measures to narrow developmental gaps and achieve more widespread improvements in IGTFP across China.