The effects of digital economy on manufacturing resource allocation efficiency across Chinese cities: a spatial economic perspective

The development of digital economy provides significant impacts on spatial distribution of industries. Using microdata from Chinese manufacturing enterprises and adopting a spatial economic perspective, this study reveals that the digital economy exerts non-linear impacts on resource allocation. As the level of urban digital economy improves, the efficiency of manufacturing resource allocation shows an inverted U-shaped trend, and high hierarchy cities exhibit higher critical values. The study finds a positive spatial correlation in manufacturing resource allocation efficiency across cities; however, the growth of digital economy in neighbouring cities may lead to backwash effects and impede local improvements in allocation efficiency. The mechanism analysis indicates that the digital economy primarily affects spatial resource allocation through urban agglomeration economies and diseconomies. Consequently, economic agents and policy makers in cities should consider the dual effects of ‘location optimization’ and ‘transforming the economy from substantial to fictitious’ during digital transformation processes to select optimal development paths and improve allocation efficiency.