How Does Digital Economy Drive China’s Industrial Structure Upgrading? A Multi-Sector Endogenous Growth Model

In an era where the digital economy is burgeoning, understanding its impact on industrial structure is crucial. This study develops a multi-sector endogenous growth model, combined with non-homothetic CES consumption preferences, to analyze how the digital economy influences the upgrading of China’s industrial structure. Based on a supply-demand coupling framework, this model examines the impact of key factors such as technological accumulation, digital empowerment, consumption scale expansion, and the alleviation of financing constraints. Empirical test supports the theoretical predictions, and reveals the following key findings: (1) The development of the digital economy significantly promotes industrial structure upgrading by expanding the consumption scale. However, as demand in the service sector becomes more rigid, the positive impact of the digital economy on upgrading begins to decelerate. (2) Through technological empowerment, the digital economy boosts industrial R&D success rates, widening the technological gap among sectors and accelerating industrial upgrading. (3) The effect of alleviating financing constraints on industrial structure upgrading is less pronounced, as the digital economy does not exhibit sector-specific bias in addressing these constraints. These findings highlight the importance of leveraging digital technologies not only for consumption expansion but also for enhancing technological capacity.