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Does the Digital Economy Promote Domestic Non-Tradable Sectors?: Evidence from China

Author

Listed:
  • Chunying Cui

    (School of Economics and Management, Yiwu Industrial & Commercial College, Yiwu 322000, China
    School of Economics and Business Management, Central China Normal University, Wuhan 430079, China
    These authors contributed equally to this work.)

  • Ziwei Yan

    (Department of Economics and Management, Wenhua College, Wuhan 430073, China
    These authors contributed equally to this work.)

Abstract

The impact of the digital economy (DE) has become the important faction of the market volume of domestic non-tradable sectors (DNSs). As rising digitalization supersedes traditional market power as a driving force, there is increasing concern about the volume of trade and economy; however, the literature of how the DE procession changed the DNS’s are limited, although the Chinese government is eager to enlarge the scale of the domestic market to be consistent with the trend of digitalization. This paper addressed this issue by employing a series of data from prefecture-level cities between 2010 and 2019 in China. Using panel data methods under fixed effect, synthetic difference-in-differences (SDID), and temporal-spatial econometrics, the paper’s hypothesis sheds light on the positive impact of the DE on DNSs. The regression results showed a 14.84% of improvement for the effects of DE development on DNS growth. The policy impact effect increased the average treatment effect by 3.9% average treatment effect, accompanied by temporal and spatial correlations. Further analysis illustrated that a possible intermediary mechanism through which the DE promotes the development of DNSs is the enhancement of the local product market development. It was concluded that policy-makers of developing countries should be devoted to breaking down domestic trade barriers among different regions to enhance the benefits of digitalization.

Suggested Citation

  • Chunying Cui & Ziwei Yan, 2023. "Does the Digital Economy Promote Domestic Non-Tradable Sectors?: Evidence from China," Sustainability, MDPI, vol. 15(3), pages 1-23, February.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:3:p:2617-:d:1054114
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