TITLE:
The Impact of Digital Economy on FDI Quality: Evidence from China
AUTHORS:
Guo’e Xie, Fangjun Zhong
KEYWORDS:
Digital Economy, FDI Quality, Business Environment, Industrial Agglomeration
JOURNAL NAME:
Open Journal of Business and Management,
Vol.13 No.6,
November
14,
2025
ABSTRACT: During the economic transition period, China is in urgent need of high-quality FDI to drive high-quality economic development. Under the new circumstances, the development level of the digital economy has become a crucial driver for enhancing FDI quality. Based on China’s provincial panel data from 2012 to 2021, the paper employs a two-way fixed effects model to deeply explore the impact of the digital economy on FDI quality and its underlying mechanism. The results indicate that the development of the digital economy significantly improves FDI quality, with the foundation of digital economy development and the dimension of digital industrialization playing a prominent role in this improvement. Moreover, this enhancing effect is more pronounced in the eastern region of China. Mechanism analysis reveals that the development of the digital economy can promote the improvement of FDI quality by optimizing the business environment and increasing the degree of industrial agglomeration. The paper uncovers the promoting effect of digital economy development on FDI quality, providing important insights for formulating policies to advance digital economy development and improve FDI quality.