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How does digital technology affect total factor productivity in manufacturing industries? Empirical evidence from China

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  • Shihong Zeng
  • Hongru Sha
  • Yongyi Xiao

Abstract

Extensive studies have discussed the relationship between digital technology and total factor productivity (T.F.P.) in manufacturing industries, but far less attention is paid to the nonlinear relationship. Based on the panel data of China’s manufacturing industries and matching data of National Intellectual Property Public Service Network from 2000 to 2019, this article aims to explore how digital technology affects T.F.P. in manufacturing industries. The result demonstrates that a significant inverted U-shaped relationship is between digital technology and T.F.P. The threshold in high technology manufacturing industries is larger than that in low and middle technology manufacturing industries. With the progress of digital technology, the expenditure of technology and equipment upgrading is increasing. However, the marginal return of technology and equipment is decreasing, besides technology innovation. The case of China perhaps provides new insights into manufacturing industries in developing country to gain sustainable development.

Suggested Citation

  • Shihong Zeng & Hongru Sha & Yongyi Xiao, 2023. "How does digital technology affect total factor productivity in manufacturing industries? Empirical evidence from China," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(1), pages 2167221-216, December.
    • Handle: RePEc:taf:reroxx:v:36:y:2023:i:1:p:2167221
    DOI: 10.1080/1331677X.2023.2167221
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