Research on the mechanism of digital economy enabling the conversion of new and old kinetic energy

The digital economy has become a significant force behind global economic growth industrial transformation, and upgrading. As China transitions from a phase of rapid growth to one of high-quality development, fostering new growth drivers and promoting the conversion of old and new drivers are critical pathways to achieving this goal. This study investigates the effects and mechanisms through which the digital economy facilitates the conversion of old and new growth drivers. Utilizing panel data from 285 Chinese cities over the period from 2011 to 2021, the study finds that the development of the digital economy can effectively empower the conversion of old and new growth drivers. The results are robust, as confirmed by robustness and endogeneity tests. Moreover, mediation analysis reveals that upgrading the industrial structure is a key pathway through which the digital economy empowers this conversion. The study also uncovers regional and urban heterogeneities in the empowerment effects of the digital economy on the conversion of old and new growth drivers. Specifically, the digital economy has a more pronounced empowering effect in western regions and central cities. To better leverage the role of the digital economy in this conversion, tailored approaches should be adopted to address regional disparities. Efforts should be made to actively promote the development of the digital economy, enhance infrastructure construction, and accelerate industrial structural upgrading.