Ways to improve cross-regional resource allocation: Does the development of digitalization matter?

Haitao Wu; Yu Hao; Chuanzhen Geng; Weiheng Sun; Youcheng Zhou; Feiling Lu

doi:10.58567/jea02040001

Authors

Haitao Wu School of Management and Economics, Beijing Institute of Technology, Beijing, China https://orcid.org/0000-0002-5592-7212
Yu Hao School of Management and Economics, Beijing Institute of Technology, Beijing, China https://orcid.org/0000-0001-8394-4215
Chuanzhen Geng Rotman Business School, University of Toronto, Mississauga, Canada https://orcid.org/0009-0004-0364-8686
Weiheng Sun Business School, Imperial College London, London, UK https://orcid.org/0009-0006-3102-412X
Youcheng Zhou Department of Accounting, Southampton Business School, University of Southampton, Southampton, UK https://orcid.org/0000-0003-1468-8208
Feiling Lu College of Letters & Science-Economics Dept, University of Wisconsin-Madison, Madison, USA https://orcid.org/0009-0009-8118-4502

DOI:

https://doi.org/10.58567/jea02040001

Keywords:

Internet development, Resource misallocation, IV estimation, DID, China

Abstract

The long-term extensive economic development has caused China's resource and environmental problems, especially the resource misallocation. The way China prioritises its limited resources is being significantly impacted by the rise of the digital economy and the interconnectedness of new technologies and the real economy. This paper quantitatively examines the linear and nonlinear impacts and mechanisms of digital development represented by internet development. With a series of empirical tests, we found that the internet development has significantly inhibited the resources misallocation, and the conclusion is still valid in the robustness test with internet popularization and internet infrastructure as the core explanatory variables. In addition to the marketization, internet development can further inhibit resource misallocation by promoting financial development, openness, urbanization and industrial structure. The findings of threshold regression suggest that the inhibitory effect of internet growth on resource misallocation becomes more visible as the degree of financial development and industrial structure increases; with the higher degree of urbanisation and marketization, although the internet development has always played an inhibitory role on resource mismatch, the inhibitory effect first increases and then decreases; with the improvement of openness, the hindering impact of internet growth on resource mismatch becomes more visible as the degree of financial development and industrial structure increases.

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