How does the digital economy impact sustainable development? -An empirical study from China

With the rapid advancement of contemporary information technology, the profound amalgamation of the digital and real economy bestows a novel impetus to attain sustainable development. This study constructs the Cobb Douglas production function from the perspective of cost minimization and combines it with the new economic geography to explore the internal relationships among the digital economy, industrial agglomeration, and sustainable development. Based on panel data from 30 Chinese provinces spanning 2015 to 2021, this study establishes a time-fixed effects model, a mediation effect model, and Shapley Additive Explanations, thereby analyzing the impact and action path of the digital economy on sustainable development and investigating the heterogeneity in regional and industrial agglomeration patterns. These findings indicate that digital economy has a significant positive effect on sustainable development. Industrial agglomeration is an important way for the digital economy to promote sustainable development. Simultaneously, an inverted U-shaped relationship exists between digital economy and industrial agglomeration. Furthermore, the positive effect of the digital economy on sustainable development in the eastern and western regions is more significant than in the northeastern and central regions, and the effect of specialized agglomeration is significantly better than that of diversified agglomeration. Therefore, applying industrial agglomeration and perfecting digital economic laws and regulations and governance rules should be used to give full play to the digital dividend, promote sustainable development, and realize the harmonious development of the economy, society, and environment.