How does digital economy drive the high‐quality development of regional manufacturing?

Digital technologies promote economic progress. The digital economy drives the development of manufacturing. This paper explores the impact of the digital economy on the high‐quality development of manufacturing using panel data from the Yangtze River Economic Belt in China. Employing the entropy method, we first measure the level of the digital economy and the high‐quality development of manufacturing. Then, we divide the digital economy into three dimensions: the digital foundation, the digital application, and the digital innovation, and investigate how each dimension influences the high‐quality development of manufacturing. Results show that: (1) Both the digital economy level and the high‐quality development level of manufacturing exhibit steady growth, while the overall value of the Yangtze River Economic Belt stays low. (2) Three dimensions of the digital economy positively affect the high‐quality development of manufacturing, with the most noticeable effect of the digital innovation, followed by the digital application and the digital foundation. (3) Threshold effect tests demonstrate that both the digital foundation and the digital application exhibit a double threshold effect on the high‐quality development of the manufacturing, but the digital innovation has a single threshold effect. (4) Last but not the least, the digital foundation positively affects the high‐quality development of the manufacturing in downstream and upstream regions, but less apparently influences midstream regions by the heterogeneity analysis. Additionally, both the digital application and the digital innovation have significant effects on the high‐quality development of the manufacturing across all regions.