The impact of the digital economy on the total factor productivity of manufacturing firms: Empirical evidence from China

The digital economy plays a pivotal role in driving the transformation of old and new energy sources and improving total factor productivity in China. This study focuses on Chinese A-share listed companies in Shanghai and Shenzhen. Using the entropy weight method, the digital economy indexes are evaluated based on digital industrialization and industrial digitization. The panel fixed effect model and mediation effect model are utilized to quantitatively analyze the effects and mechanisms of the digital economy on total factor productivity. The findings suggest that the digital economy significantly enhances total factor productivity, primarily through mechanisms such as research and development (R&D) and innovation, alleviation of financing constraints, and economies of scale. The digital economy has a stronger impact on the total factor productivity of enterprises in the eastern region, the regions with high levels of traditional infrastructure development, high-competitive industries and non-state-owned enterprises. This study focuses on exploring the productivity effects of the digital economy in a more detailed manner. The findings of this study will provide valuable policy recommendations and insights for improving the efficiency of enterprises.