Can digital economy development improve the coordination of IFDI and OFDI? evidence from 246 cities in China

ABSTRACT

This study examines the impact of digital economy development on the coordination of inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI) in 246 Chinese cities from 2011 to 2020. Panel data analysis is used to measure the comprehensive development index of the digital economy and the coupling and coordination of IFDI and OFDI. The results show that digital economy development significantly promotes the coordination of IFDI and OFDI, even after conducting various robustness tests. The study also finds that technological innovation plays a mediating role in the relationship between digital economy development and the coordination of IFDI and OFDI. Additionally, the research reveals that the enhancing effect of digital economy development on the coordination of IFDI and OFDI is stronger in the eastern regions and the five major urban agglomerations. This study contributes to the understanding of the role of the digital economy in promoting the coordination of IFDI and OFDI and provides practical implications for policymakers to enhance such coordination in cities.

KEYWORDS:

• Digital economy
• coordination of IFDI and OFDI
• two-way fixed effects

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The eastern region includes 11 provinces and cities, including Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan; the central region includes 8 provinces, including Shanxi, Jilin, Anhui, Jiangxi, Henan, Hubei, Hunan, and Heilongjiang; and the western region includes 11 provinces and cities, including Inner Mongolia, Sichuan, Chongqing, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang. Tibet was not examined due to the serious lack of data.

2 The five major city agglomerations include the Yangtze River Delta (YRD), Pearl River Delta (PRD), Beijing-Tianjin-Hebei (BJH), Chengdu-Chongqing City Cluster (CCC), and the city cluster in the middle reaches of Yangtze River.

Additional information

Funding

This work was supported by National Social Science Foundation of China: [Grant Number 21BJL107].

Notes on contributors

Yujie Li

Yujie Li is pursuing a Master's in International Business at the School of Economics, Shandong Normal University in Jinan, China. Her research focuses on the digital economy, two-way investment, and regional economics.

Tingwei Chen

Tingwei Chen is currently working towards a Ph.D. degree in Regional Economics and Foreign Trade at the School of Economics, Shandong Normal University, Jinan, China. Her research interests include two-way investments and regional economics.

Zongbin Zhang

Zongbin Zhang, a PhD supervisor at Shandong Normal University in Jinan, China, has research interests in Regional Economics and Foreign Trade. He is also the academic leader of a key discipline in Shandong Province.