Fiscal decentralization and the development of the digital economy: evidence from China

Abstract

A persistent literature gap exists in understanding the impact of fiscal decentralization on the digital economy. This study examines the correlation between fiscal decentralization and the development of digital economy drawing on the province data in China from 2013 to 2021. We find that (1): Local government fiscal decentralization actively nurtures the growth of the local digital economy (2). The principal mechanism propelling this phenomenon is the augmentation of financial decentralization facilitated by fiscal decentralization, thereby catalyzing the overall advancement of the digital economy. This study holds substantial significance in the global context of digital economy development.