The impact of digital government on cross-regional investment: Evidence from Chinese cities

Xian Zheng, Xinyi Du and Weihao Wu

Economic Analysis and Policy, 2025, vol. 87, issue C, 99-122

Abstract: This paper examines the impact of digital government development in China on cross-regional corporate investment. Using a machine learning approach that integrates LSTM and RoBERTa for text classification, we quantitatively assess the level of digital government advancement across various regions. Our findings show that digital government initiatives attract corporate off-site investments. Machine learning-assisted analysis further supports these findings. The effect is particularly pronounced in cities with more advanced financial development and among private firms. Mechanism analysis demonstrates that digital government construction influences cross-regional investments through two primary pathways: enhancing government governance capacity by improving the commercial credit environment, administrative efficiency, and fiscal transparency; and improving market operation quality by unlocking market potential, stimulating economic vitality, and boosting market efficiency. These mechanisms collectively provide institutional and market support, creating favorable conditions for cross-regional investments. The study provides actionable insights for policymakers, highlighting the importance of strengthening digital governance to enhance regional economic integration and promote balanced development.

Keywords: Digital government; Cross-regional investment; Machine learning; Government governance capacity; Market operating quality; Regional economic integration (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:99-122

DOI: 10.1016/j.eap.2025.05.055

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