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Can digital infrastructure improve corporate productivity? Evidence from a quasi-natural experiment in China✰

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  • Meng, Shunjie
  • Xu, Xiaoxin

Abstract

Digital infrastructure, as the basis for the development of the digital economy, has a significant impact on corporate activities. Based on China's enterprises data from 2007 to 2020, we construct a three-sector theoretical model and study the impact of digital infrastructure on firms' total factor productivity (TFP) using the Big Data Pilot Zone (BDP) policy as an exogenous shock. We adopt the difference-in-differences (DID) model and find that the BDP policy increases corporate TFP. The mechanism shows that the BDP policy improves corporate information technology capabilities. Meanwhile, the BDP policy helps firms better match talent and stimulates firms to engage in innovative activities. Furthermore, non-state-owned firms, high management quality firms, competitive industries, and highly digitized industries benefit more from the BDP policy. Our research highlights the significance of digital infrastructure for social change and offers empirical evidence and policy recommendations for advancing the close integration of the real and digital economies.

Suggested Citation

  • Meng, Shunjie & Xu, Xiaoxin, 2025. "Can digital infrastructure improve corporate productivity? Evidence from a quasi-natural experiment in China✰," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1867-1884.
    • Handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:1867-1884
    DOI: 10.1016/j.eap.2025.02.030
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