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Digital economy and high-quality tourism development: Roles of environmental regulations and foreign direct investments

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  • Cheng, Lin

Abstract

This study investigates how digital economy (DIG) development influences high-quality tourism across 30 Chinese provinces from 2010 to 2022, using a framework that considers both mechanisms and contextual factors. High-quality tourism is assessed through a multidimensional index covering innovation, coordination, sustainability, openness, and shared benefits, while the DIG is measured through digital infrastructure, industries, and inclusive finance. Applying fixed-effects regressions, instrumental variables, and propensity score matching to address endogeneity, we find robust evidence that digital development significantly enhances tourism quality. Foreign direct investment (FDI) acts as a key mediator, with stronger digital economies attracting more FDI that improves tourism infrastructure and services. Environmental regulation further strengthens this relationship: provinces with stricter standards use digital tools more effectively for sustainable tourism, amplifying quality gains. Heterogeneity analysis shows notable disparities, eastern provinces and those more open to foreign investment experience stronger DIG–tourism linkages than western or less-open regions. These findings demonstrate that digitalization drives qualitative, not just quantitative, tourism growth and underscore the need for coordinated policies integrating digital investment, FDI facilitation, and environmental governance. Fully realizing the benefits of digital transformation in tourism requires bridging regional digital divides and fostering supportive institutional frameworks.

Suggested Citation

  • Cheng, Lin, 2026. "Digital economy and high-quality tourism development: Roles of environmental regulations and foreign direct investments," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325026108
    DOI: 10.1016/j.frl.2025.109361
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