The coordination between digital economy policies and digital-real integration: pathways to advance digital economy development

Purpose Against the backdrop of the profound transformations brought about by the digital economy, this study aims to examine whether the coordinated development of digital economy policies and digital-real integration constitutes a viable pathway to drive the growth of the digital economy. Design/methodology/approach Drawing on data spanning 2016 to 2022, this study employs a series of regression models to examine the impact of the coordination between digital economy policies and digital-real integration on digital economy development. Findings It is hard for prefecture-level and above cities in China to significantly expand the scale of their local digital economy merely by strengthening digital economy policies. Instead, the coordination between digital economy policies and digital-real integration constitutes an effective pathway to promote the development of the local digital economy, with the demand-pull effect, resource allocation effect and innovation incentive effect serving as its internal mechanisms. Threshold effect analysis reveals that moderate policy advancement stimulates the development of the digital economy, while excessive mismatch may incur institutional friction costs. Originality/value Utilizing enterprise-level data, this study achieves a more accurate measurement of the development scale of core industries in the digital economy across Chinese cities, thereby alleviating the potential overestimation issue prevalent in existing literature that relies on the entropy weight method or input-output method to estimate the scale of the digital economy development. In addition, this study further takes the perspective of digital-real integration as an innovative approach to addressing the mismatch between digital economy policies and their development.