Internet development and the spatial optimization of regional productivity: Evidence from China

Abstract

The rapid development of the Internet had a profound influence on the spatial distribution of economic output activities. On the basis of theoretical analysis, this study takes China's regions as research samples and construct a spatial econometric model to empirically analyze the impact of Internet development on regional productivity. The analysis reveals that the distribution of regional productivity in China had significant spatial correlation; regional productivity had positive spatial externalities; Internet development had significant promotion effects and positive spatial spillover effects to regional productivity, but the effects are heterogeneous in different subregions. The subregion analysis shows that the optimization effect of the Internet on regional productivity exhibits heterogeneity in different subregions. The threshold effect analysis reveals the increasing marginal effect of Internet development on regional productivity, and economic development and human capital supply are important factors restricting this marginal effect. Altogether, this study provides useful references on the positive effects of the Internet on regional productivity in the spatial dimension, and suggests that the policy makers can optimize the spatial distribution of regional productivity by promoting Internet access in various regions and narrowing the digital divide among regions.