The Institutional Foundations of Digital Industry Development: Insights from Intellectual Property Protection

Accelerating the development of the digital industry is a vital task for China to seize the commanding heights of international competition in the new era. Given the intangible, replicable, and easily infringed nature of digital technological achievements, strengthening the protection of digital intellectual property is particularly critical. This paper leverages the ongoing efforts to improve China’s judicial system for intellectual property protection and exploits the staggered establishment of specialized intellectual property courts and tribunals (IPCs) across various regions since 2014 as a quasi-natural experiment. Based on a comprehensive dataset covering over 50 million new enterprises, we find that the introduction of IPCs significantly enhances the vibrancy of digital industry development in the jurisdictions concerned, as evidenced by a 12.5% increase in the share of digital startups among all newly founded firms. Mechanism analysis shows that stronger judicial protection of digital property rights boosts the innovation motivation of digital talent and the investment willingness of investors, thereby facilitating more digital innovation outcomes that underpin digital industrial growth. Heterogeneity analysis indicates that these effects are more pronounced in regions with stronger intellectual resources, more mature financial markets, and more proactive local policy and fiscal support. Finally, in terms of economic consequences, judicial empowerment of digital industry development significantly contributes to regional economic growth, making it an important driver of local development in the new era. This study provides robust evidence for the positive impact of judicial intellectual property protection on the development of the digital industry and offers important policy implications for China to gain a first-mover advantage in the global digital economy.