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AI and Digital Economy Integration and Industrial Upgrading in China

Author(s)

Menglin Yang*

Affiliation(s)

School of Economics and Finance, Queen Mary University of London, London E1 4NS, UK *Corresponding Author

Abstract

Based on the integration of artificial intelligence (AI) and the development of the digital economy as well as industrial upgrading across all provinces in China during the period from 2012 to 2022 using provincial-level panel data. Using a two-way fixed-effect model combined with causal mediation analysis and quasi-experimental design to identify the three pathways through which AI-digital economy integration affects industrial structure transformation, namely, technological innovation expansion, optimisation of the workforce composition, and improvement in resource allocation efficiency. Empirical estimation shows that, on average, a one-standard deviation rise in the composite AI-Digital Economy Integration Index (ADEI) leads to an ISA score increase of 0.048 points; this effect is more pronounced in the east and after 2017 when China launched its new-generation AI development plan. Heterogeneity analysis also shows that the positive impact is significantly enhanced for provinces with national-level big data comprehensive pilot zones to demonstrate the institutional-policy synergy mechanism. The above results provide strong support for the comprehensive promotion of China's quality-driven development path. Integrated artificial intelligence digital policies show better upgrading effects than single-use technology intervention or infrastructure construction.

Keywords

Artificial Intelligence; Digital Economy; Industrial Upgrading; Total Factor Productivity; Panel Data

References

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