Navigating the Digital Frontier: Digital Economy and High‐Quality Development in Manufacturing Industry

Lei Xu, Xuanyu Du and Qiuyu Tang

Review of Development Economics, 2026, vol. 30, issue 4, 2454-2483

Abstract: The integration of digital factors and technologies into production has inevitably led to exponential growth in the digital economy's scale within the manufacturing sector. It is crucial to steer this growth toward the long‐term, sustainable objective of high‐quality development. This paper, based on data from 27 sub‐sectors of China's manufacturing industry from 2003 to 2020 and supplemented by measurements of firm‐level high‐quality development indicators using large language models and machine learning methods, systematically integrates traditional economic growth theories to empirically investigate the impact of the digital economy on the high‐quality development of manufacturing. The study finds that the expansion of the digital economy significantly promotes the high‐quality development of the manufacturing sector. The mechanism analysis reveals that this promotional effect is primarily realized through three channels: the scale economy effect, the technology spillover effect, and the industrial upgrading effect. Furthermore, intellectual property protection plays a significant moderating role, exhibiting a distinct double‐threshold characteristic. The heterogeneity analysis reveals that the digital economy's impact varies significantly across industries, creating a synergistic effect in technology‐intensive sectors, promoting a green transition in high‐pollution sectors, and facing a persistent digital divide in foundational sectors. This paper provides a systematic theoretical framework for understanding the dynamic relationship between digital economic growth and high‐quality manufacturing development, offering important empirical evidence for governments aiming to balance economic growth efficiency with sustainability goals.

Date: 2026
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