Open Access Journal Article

On the Role of the Digital Industry in Reshaping Urban Economic Structure: the Case of Hangzhou, China

by Xuliang Zhang a ,  Chenxiang Elaine Ji b,* orcid ,  Haixia Zhang c orcid ,  Yuchen Wei d  and  Jianwei Jin e orcid
a
Center for Research of Private Economy, Zhejiang University, Hangzhou, China
b
School of Public Finance and Taxation, Zhejiang University of Finance & Economics, Hangzhou, China
c
School of Tourism Management and Urban-rural Planning, Zhejiang Gongshang University, Hangzhou, China
d
School of Geography, Nanjing Normal University, Nanjing, China
e
Hangzhou City Planning and Design Academy, Hangzhou, China
*
Author to whom correspondence should be addressed.
JEA  2023, 42; 2(4), 42; https://doi.org/10.58567/jea02040007
Received: 12 May 2023 / Accepted: 19 June 2023 / Published Online: 6 July 2023
View Full-Text
Download PDF

Abstract

The digital economy industry plays a transformative role in reshaping the global production networks, the local division of production, and the integration and innovation of business forms. However, to what extent the industry enables the high-quality development and upgrading of urban economies is unclear. Based on the census data of digital economy enterprises in Hangzhou in 2008, 2013 and 2018, this paper verifies the characteristics of the digital economy industry and its enabling mechanism for high-quality urban economic development. It is found that: firstly, the digital economy industry has three main forms for the economy, namely, the sharing, scale and scope economy. Secondly, the industry has four major mechanisms to improve the quality of urban economies. That is, it can restructure the global industrial division of labor and value chains, promote the transformation of scale economy from the supply side to the demand side, enable the softening and servitization of industrial structure, and generate the scale of economies. This paper thus contributes to understanding the evolution of enterprise organizational structure and industrial competitiveness and the endogenous technological change under the digital economy.

Keywords: Digital economy industry; division of labor derivation; agglomeration evolution; urban development; Hangzhou;
Copyright: © 2023 by Zhang, Elaine Ji, Zhang, Wei and Jin. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
Show Figures

Share and Cite

ACS Style
Zhang, X.; Elaine Ji, C.; Zhang, H.; Wei, Y.; Jin, J. On the Role of the Digital Industry in Reshaping Urban Economic Structure: the Case of Hangzhou, China. Journal of Economic Analysis, 2023, 2, 42. https://doi.org/10.58567/jea02040007
AMA Style
Zhang X, Elaine Ji C, Zhang H, Wei Y, Jin J. On the Role of the Digital Industry in Reshaping Urban Economic Structure: the Case of Hangzhou, China. Journal of Economic Analysis; 2023, 2(4):42. https://doi.org/10.58567/jea02040007
Chicago/Turabian Style
Zhang, Xuliang; Elaine Ji, Chenxiang; Zhang, Haixia; Wei, Yuchen; Jin, Jianwei 2023. "On the Role of the Digital Industry in Reshaping Urban Economic Structure: the Case of Hangzhou, China" Journal of Economic Analysis 2, no.4:42. https://doi.org/10.58567/jea02040007
APA style
Zhang, X., Elaine Ji, C., Zhang, H., Wei, Y., & Jin, J. (2023). On the Role of the Digital Industry in Reshaping Urban Economic Structure: the Case of Hangzhou, China. Journal of Economic Analysis, 2(4), 42. https://doi.org/10.58567/jea02040007

Article Metrics

Article Access Statistics

References

  1. Arceo, E.; Hanna, R. & Oliva, P. (2016). Does the Effect of Pollution on Infant Mortality Differ between Developing and Developed Countries? Evidence from Mexico City. The Economic Journal, 126(591), 257–280. https://doi.org/10.1111/ecoj.12273.
  2. Becchetti, L. & Adriani, F. (2005). Does the Digital Divide Matter? The Role of Information and Communication Technology in Cross-Country Level and Growth Estimates? SSRN Electronic Journal, 14(6), 435-453. https://doi.org/10.2139/ssrn.382983.
  3. Boschma, R. & Frenken, K. (2018). Evolutionary economic geography. In The New Oxford Handbook of Economic Geography; Clark, G. L.; Feldman, M. P.; Gertler, M. S.; Dariusz Wójcik; Kaiser, A.; Oxford University Press: Oxford, United Kingdom; pp. 213-229.
  4. Boschma, R. & Frenken, K. (2011). The Emerging Empirics of Evolutionary Economic Geography. Journal of Economic Geography, 11(2), 295–307. https://doi.org/10.1093/jeg/lbq053.
  5. Carayannis, E. G.; Goletsis, Y. & Grigoroudis, E. (2015). Multi-level multi-stage efficiency measurement: the case of innovation systems. Operational Research, 15, 253-274. https://doi.org/10.1007/s12351-015-0176-y.
  6. Cardona, M.; Kretschmer, T.; Strobel, T. (2013). ICT and Productivity: Conclusions from the Empirical Literature. Information Economics and Policy, 25(3), 109–125. https://doi.org/10.1016/j.infoecopol.2012.12.002.
  7. Cassell, K. A. & Mercado, M. I. (1999). Information Rules: A Strategic Guide to the Network Economy. The Bottom Line, 12(1). https://doi.org/10.1108/bl.1999.17012aad.003.
  8. Chen, Y.; Xu, S.; Lyulyov, O. & Pimonenko, T. (2022). China’s Digital Economy Development: Incentives and Challenges. Technological and Economic Development of Economy, 1–21. https://doi.org/10.3846/tede.2022.18018.
  9. Chu, H., Hassink, R., Xie, D., & Hu, X. (2023). Placing the platform economy: the emerging, developing and upgrading of Taobao villages as a platform-based place making phenomenon in China. Cambridge Journal of Regions, Economy and Society, rsad004. https://doi.org/10.1093/cjres/rsad004.
  10. Currah, A. (2006). Hollywood versus the Internet: The Media and Entertainment Industries in a Digital and Networked Economy. Journal of Economic Geography, 6(4), 439–468. https://doi.org/10.1093/jeg/lbl006.
  11. Daemmrich, A. (2017). Invention, Innovation Systems, and the Fourth Industrial Revolution. Technology & Innovation, 18(4), 257–265. https://doi.org/10.21300/18.4.2017.257.
  12. Gautier, A. & Lamesch, J. (2021). Mergers in the digital economy. Information Economics and Policy, 54, 100890. https://doi.org/10.1016/j.infoecopol.2020.100890.
  13. Golubchikov, O. (2006). Interurban Development and Economic Disparities in a Russian Province. Eurasian Geography and Economics, 47(4), 478–495. https://doi.org/10.2747/1538-7216.47.4.478.
  14. He, S., Yang, S., Razzaq, A., Erfanian, S. & Abbas, A. (2023). Mechanism and Impact of Digital Economy on Urban Economic Resilience under the Carbon Emission Scenarios: Evidence from China’s Urban Development. International Journal of Environmental Research and Public Health, 20(5), 4454. https://doi.org/10.3390/ijerph20054454.
  15. Hu, X., Wu, Q., Xu, W., & Li, Y. (2022). Specialty towns in China: Towards a typological policy approach. Land Use Policy, 114, 105933. https://doi.org/10.1016/j.landusepol.2021.105933.
  16. Janeba, E. (2007). International Trade and Consumption Network Externalities. European Economic Review, 51(4), 781–803. https://doi.org/10.1016/j.euroecorev.2006.07.002.
  17. Jones, J. (2017). Agglomeration Economies and the Location of Foreign Direct Investment: A Meta-Analysis. Journal of Regional Science, 57(5), 731–757. https://doi.org/10.1111/jors.12335.
  18. Jorgenson, D. W.; Ho, M. S.; Samuels, J. D. & Stiroh, K. J. (2007). Industry Origins of the American Productivity Resurgence. Economic Systems Research, 19(3), 229–252. https://doi.org/10.1080/09535310701571885.
  19. Kirner, E.; Som, O. & Jäger, A. (2015). The market environment and competitive factors of non-R&D-performing and non-R&D-intensive firms. In Low-tech Innovation: Competitiveness of the German Manufacturing Sector; Son, O.; Kirner, E.; Springer Cham; PP. 79-89. https://doi.org/10.1007/978-3-319-09973-6_6.
  20. Kirzner & Sautet, F. (2011). Market Theory & the Price System. Gazelle Distribution Trade.
  21. Ma, D. & Zhu, Q. (2022). Innovation in Emerging Economies: Research on the Digital Economy Driving High-quality Green Development. Journal of Business Research, 145, 801-813. https://doi.org/10.1016/j.jbusres.2022.03.041.
  22. Mueller, M. & Grindal, K. (2019). Data Flows and the Digital Economy: Information as a Mobile Factor of Production. Digital Policy, Regulation and Governance, 21(1), 71–87. https://doi.org/10.1108/dprg-08-2018-0044.
  23. Nakamura, L.; Samuels, J. & Soloveichik, R. (2017). Measuring the “Free” Digital Economy within the GDP and Productivity Accounts. Working Papers, 17-37. Federal Reserve Bank of Philadelphia. https://www.bea.gov/index.php/system/files/papers/WP2017-9.pdf (accessed 2023-03-18).
  24. Negroponte, N.; Harrington, R.; McKay, S. R. & Christian, W. (1997). Being Digital. Computers in Physics, 11(3), 261-262. https://doi.org/10.1063/1.4822554.
  25. Olbert, M. & Spengel, C. (2017). International Taxation in the Digital Economy: Challenge Accepted. World Tax Journal, 9(1), 3-46. https://doi.org/10.1086/717518.
  26. Ōtsuka, A. (2017). A new perspective on agglomeration economies in Japan: An Application of Productivity Analysis. Springer: Singapore.
  27. Paunov, C. & Rollo, V. (2016). Has the Internet Fostered Inclusive Innovation in the Developing World? World Development, 78, 587–609. https://doi.org/10.1016/j.worlddev.2015.10.029.
  28. Ren, S., Li, L., Han, Y., Hao, Y. & Wu, H. (2022). The Emerging Driving Force of Inclusive Green Growth: Does Digital Economy Agglomeration work?. Business Strategy and the Environment, 31(4), 1656-1678. https://doi.org/10.1002/bse.2975.
  29. Richter, C.; Kraus, S.; Brem, A.; Durst, S. & Giselbrecht, C. (2017). Digital Entrepreneurship: Innovative Business Models for the Sharing Economy. Creativity and Innovation Management, 26(3), 300–310. https://doi.org/10.1111/caim.12227.
  30. Salvador, E., Mariotti, I. & Conicella, F. (2013). Science Park or Innovation Cluster? Similarities and Differences in Physical and Virtual Firms’ Agglomeration Phenomena. International Journal of Entrepreneurial Behavior and Research, 19(6), 656-764. https://doi.org/10.1108/IJEBR-10-2012-0108.
  31. Scott, A. J. (1986). Industrial Organization and Location: Division of Labor, the Firm, and Spatial Process. Economic Geography, 62(3), 215-231. https://doi.org/10.2307/144006.
  32. Shade, L. R. (2016). Integrating Gender into Canadian Internet Policy: From the Information Highway to the Digital Economy. Journal of Information Policy, 6, 338. https://doi.org/10.5325/jinfopoli.6.2016.0338.
  33. Sun, Q., Wang, C., Zhou, Y., Zuo, L. & Tang, J. (2020). Dominant platform capability, symbiotic strategy and the construction of “Internet+ WEEE collection” business ecosystem: A comparative study of two typical cases in China. Journal of Cleaner Production, 254, 120074. https://doi.org/10.1016/j.jclepro.2020.120074.
  34. Tabuchi, T. (2013). Agglomeration in World Cities. Procedia - Social and Behavioral Sciences, 77, 299–307. https://doi.org/10.1016/j.sbspro.2013.03.088.
  35. Tapscott, D. (1997). The Digital Economy: Promise and Peril in the Age of Networked Intelligence; Mcgraw-Hill: New York.
  36. Tovar, B. & Wall, A. (2012). Economies of Scale and Scope in Service Firms with Demand Uncertainty: An Application to a Spanish Port. Maritime Economics & Logistics, 14(3), 362–385. https://doi.org/10.1057/mel.2012.12.
  37. Tranos, E., Kitsos, T. & Ortega-Argilés, R. (2021). Digital Economy in the UK: Regional Productivity Effects of Early Adoption. Regional Studies, 55(12), 1924-1938. https://doi.org/10.1080/00343404.2020.1826420.
  38. Tsai, H.-H.; Lee, H.-Y. & Yu, H.-C. (2008). Developing the Digital Content Industry in Taiwan. Review of Policy Research, 25(2), 169–188. https://doi.org/10.1111/j.1541-1338.2007.00317.x.
  39. Vu, K. & Hartley, K. (2022). Effects of Digital Transformation on Electricity Sector Growth and Productivity: A Study of Thirteen Industrialized Economies. Utilities Policy, 74, 101326. https://doi.org/10.1016/j.jup.2021.101326.
  40. Wang, J., Dong, K., Sha, Y. & Yan, C. (2022). Envisaging the Carbon Emissions Efficiency of Digitalization: The Case of the Internet Economy for China. Technological Forecasting and Social Change, 184, 121965. https://doi.org/10.1016/j.techfore.2022.121965.
  41. Wang, R.; Liang, Q. & Li, G. (2018). Virtual agglomeration: a new form of spatial organization with deep integration of new generation of information technology and real economy. Management World, 34(02), 13-21. https://doi.org/10.19744/j.cnki.11-1235/f.2018.02.002.
  42. Welfens, P. J. (2007). Digital social market economy—towards a new economic system. In Digital Economic Dynamics; Paul J.J. Welfens; Weske, M. Springer Science & Business Media; pp.25-61. https://doi.org/10.1007/978-3-540-36030-8_3.
  43. Yin, Z., Gong, X., Guo, P. & Wu, T. (2019). What Drives Entrepreneurship in Digital Economy? Evidence from China. Economic Modelling, 82, 66-73. https://doi.org/10.1016/j.econmod.2019.09.026.
  44. Zhang, W., Zhao, S., Wan, X. & Yao, Y. (2021). Study on the Effect of Digital Economy on High-quality Economic Development in China. PLOS ONE, 16(9), e0257365. https://doi.org/10.1371/journal.pone.0257365.
  45. Zhu, W. & Chen, J. (2022). The spatial analysis of digital economy and urban development: A case study in Hangzhou, China. Cities, 123, 103563. https://doi.org/10.1016/j.cities.2022.103563.