The fast-expanding digital economy is reshaping the resource-allocation system and green-governance system, yet its contribution to ecological efficiency within the regional economic system remains insufficiently quantified. Using provincial panel data from China over 2011–2023, we establish a fixed-effects specification to examine how digital economy development affects ecological efficiency and examine potential mechanisms. We find that digital economy development significantly improves ecological efficiency, and this result remains robust across a wide range of alternative specifications and sensitivity tests. The positive effect operates primarily through higher green innovation output and industrial upgrading. The above relationship exhibits a clear threshold with respect to environmental regulation: when regulation is relatively weak, the estimated impact of digital economy on ecological efficiency is statistically indistinguishable from zero, whereas once regulation exceeds the threshold, the positive effect becomes substantially stronger, consistent with complementarity between regulation and digitalization. Moreover, heterogeneity analyses further indicate larger gains in provinces with higher economic development and human capital. Our evidence underscores that aligning digital transformation with appropriately designed regulatory institutions can enhance ecological efficiency and support the innovation and management of a more sustainable and competitive economic system in the digital era.
Yan et al. (Thu,) studied this question.