Can Digitization Policy Improve Capital Misallocation in China? Empirical Evidence Based on National Big Data Comprehensive Pilot Zone Policy

Digital development enhances the mobility of capital factors in urban networks. The mismatch between the supply of capital factors and the demand for urban development limits the improvement of investment efficiency, while the interaction between digital policies and network externalities will have an important impact on the efficiency of urban capital allocation. Based on the data of Chinese prefecture-level cities from 2005 to 2022 and the synthetic difference-in-difference model, this paper explored the capital lock-in mechanism of the National Big Data Comprehensive Pilot Zone (NBDCPZ) policy from three dimensions: consumer market, production division and business environment. The results indicated that: (1) the NBDCPZ generally improves the scale and speed of capital allocation in pilot cities, but the effect is different for different batches and cities in different regions; (2) the big data integrated pilot area mainly affected the allocation of local capital factors through momentum conversion, peer competition, and risk mitigation effects; (3) the phenomenon of over-investment caused by “borrowing scale†caused by urban network externalities is relatively common, and the role of NBDCPZ in resolving over-investment in cities with different population sizes and different distances from the central provincial capitals is heterogeneous.