Mechanism and spatial spillover effect of digital economy on common prosperity in the Yellow River Basin of China

Abstract

The digital economy has emerged as a new trend in economic development and has profoundly influenced the process of achieving common prosperity. However, current research on the correlation between the digital economy and common prosperity from the perspective of a river basin still needs to be strengthened. Based on this, the present study first theoretically elaborates the conceptual meanings of “digital economy” and “common prosperity”, as well as the mechanism by which the digital economy empowers common prosperity. Subsequently, a scientifically-constructed performance evaluation index system for the digital economy and common prosperity is established. Considering the Yellow River Basin as an empirical case study area, this study investigates the mechanism and spatial spillover effects of the digital economy in empowering common prosperity from 2005 to 2020. The research findings reveal that: (1) The Yellow River Basin exhibits a basin characteristic with downstream > midstream > upstream areas regarding the level of common prosperity and digital economy. It indicates that a distinct spatial correlation exists between the two factors. However, the ongoing decrease in both high-level and very high-level areas reflects the lengthy and challenging journey of enhancing the quality and efficiency of the digital economy in empowering common prosperity. (2) The digital economy not only directly impacts common prosperity, but also fosters its development through spatial spillover effects. Among the control factors, informatization and housing levels have a major stimulating effect. (3) There exists a clear regional heterogeneity in how the digital economy affects common prosperity in the Yellow River Basin. Specifically, common prosperity of downstream cities is significantly impacted by the digital economy. The spatial spillover effects of the digital economy on common prosperity exhibit a pronounced “neighborhood as a moat” characteristic. (4) The digital economy facilitates the achievement of shared prosperity through the implementation of mechanisms centered on sharing, affluence, and sustainability. These research findings illuminate the empowering mechanisms and spatial spillover pathways of the digital economy in promoting shared prosperity, aligning with national strategies for ecological conservation and high-quality development in the Yellow River Basin.

Introduction

“Achievement of common prosperity and narrowing of regional differences” are the ultimate goals of people all over the world. However, in reality, huge differences exist between countries with respect to resource endowments, political and economic systems, social organization methods, and national environments. Therefore, the development model and common prosperity process also exhibit significant regional differences. In the process of regional development, the phenomena of polarization radiation effect and trickle-down diffusion effect often occur. The polarization radiation effect promotes the expansion of growth poles, while the trickle-down diffusion effect enhances the overall development level of the region. It indicates that the development of common prosperity often exhibits phased characteristics. The wealth accumulation and distribution models formed by timely summaries of various countries, based on both local and timely conditions, provide a good reference for the world to explore the path of common prosperity. Examples include the high tax and high welfare model of Northern Europe, the free market-led model of the United States and the United Kingdom, and the productive welfare model of East Asia. However, in 2023, the United Nations Sustainable Development Goals Report stated that currently there are around 1.1 billion poor people in the world. Therefore, how to realize the common prosperity of the global poor is still a practical issue that needs urgent research attention.

One of the main desirable outcomes of communist growth and Chinese-style modernization is common prosperity¹. Chinese common prosperity represents a deep fusion of efficiency and equity, with its core objective being the fostering of a more equitable society. The 20th National Congress report highlighted that nearly 100 million rural poor have been lifted out of poverty, which marks a historic achievement in eradicating absolute poverty and contributing significantly to global poverty reduction efforts. However, vast rural population and pronounced regional development disparities in China pose significant challenges to the development of common prosperity process. In the new development stage, it is crucial to explore how to realize Chinese common prosperity and develop a Chinese-style model for common prosperity, which remains a pivotal topic. The digital economy, as a new driver of economic development, fosters the improvement of enterprises, industries, and quality and efficiency of regions through synergies, penetration effects, and network effects². In 2022, the extent of Chinese digital economy exceeded 50 trillion-yuan, accounting for more than 40% of gross domestic product (GDP). Under the new development pattern, the digital economy is becoming a significant factor in promoting common prosperity. On one hand, the digital economy, via pathways including digital industrialization and industrial digitization, creates network agglomeration effects and fosters innovation within industrial clusters. This process accelerates the generation and accumulation of social wealth, ultimately realizing the objective of shared prosperity by “expanding the cake”. On the other hand, the digital economy leveraging regional coordination and inclusivity, facilitates the fair distribution of social wealth. This approach aids in achieving the goal of shared prosperity through “sharing the cake”. However, identification of the mechanisms and specific pathways through which the digital economy empowers common prosperity, exploring whether the digital economy generates spatial effects on shared prosperity, and assessing the extent of its impact, are areas that still require further systematic research.

The Yellow River Basin plays a vital role as a significant ecological barrier in China, functioning as a critical economic zone that spans across the eastern, central, and western regions. It serves as a key focal point for poverty alleviation, regional coordination, and pursuit of shared prosperity. However, a substantial portion of the Yellow River Basin is situated within the western region, ethnic minority areas, revolutionary base areas, resource-depleted zones, and ecologically fragile regions. Common prosperity in the Yellow River Basin meets significant challenges, including ecological fragility, widening of urban–rural disparities, and pronounced economic imbalances. On September 18, 2019, during an inspection in Henan, General Secretary Xi Jinping said that the Yellow River Basin’s sustainable growth and ecological preservation would henceforth be considered national strategies. At present, the sustainable development strategy of the Yellow River Basin is continuously advancing, and realization of common prosperity is the motivation for high-quality development and ecological protection³.

The digital economy is a completely new model of economic expansion, and in addition to creating and sharing wealth, it also promotes efficiency and fairness. This study investigates the mechanisms, spillover effects, and innovation pathways of the digital economy in promoting shared prosperity by considering the Yellow River Basin as a case study. The study helps promote common prosperity for all people, solidly in the new development stage and provides practical exploration and theoretical research aspects. Furthermore, the study advances the themes of a period of excellent development and the all-encompassing building of modernity in the Chinese manner. The results also provide a “Chinese solution” for the common prosperity of the world.

The potential contributions of this study are reflected in several aspects: (1) Conceptually, past studies mostly focused on constructing indicators for common prosperity from the perspectives of commonness and prosperity, overlooking the importance of sustainability and development in common prosperity. Currently, unified standard for researching common prosperity still does not exist, and undeniably, a lot more systematic explorations are further demanded. The three dimensions proposed in this study, including, welfare, sharing, and sustainability, can better reflect the fundamental characteristics of common prosperity, emphasizing on both “expanding the pie” and “sharing the pie”. (2) Regionally, although a few scholars have conducted regional empirical analyses on the impact of the digital economy on common prosperity, most studies have concentrated on theoretical research on the digital economy and common prosperity. This study selects the Yellow River Basin as the research area, paying more attention to in-depth research areas with integration of multiple scales, grasping the development laws of economic units, and having greater significance and value in terms of enlightening implications. (3) In terms of research content, previous studies have overlooked the differences in the impact of the digital economy on common prosperity under different regional policies and economic development levels. Therefore, this study introduces scale correlation and spatial dependence into the research perspective, further revealing the mechanism of the impact of the digital economy on common prosperity, aiding in in-depth identification of the relevant characteristics of their interaction. This study offers enlightening significance for further identification and deepening of research on the relationship between the digital economy and common prosperity within regions.

Literature review

Research related to common prosperity

China’s common prosperity is unlike the differential equity of private ownership in Western countries. China’s concept is based on the Marxist idea of common prosperity and consists of the following three parts: (1) income goals, (2) social fairness, and justice goals, and (3) comprehensive human development⁴. After completing the task of alleviating poverty, China has prioritized the achievement of common prosperity for all people. Steps will be taken to formulate a series of economic policies for underdeveloped areas and disadvantaged groups to share benefits of national economic growth and build a harmonious society for a “socialist”⁵. Common prosperity has gradually become a research hotspot in academic circles. The specific content of previous research is as follows: (1) Quantitative methods: Most studies on shared prosperity have been quantified based on two perspectives, namely prosperity and sharing^6,7. They also focused on income and redistribution differences^8,9. In recent years, some scholars have included sustainability and development in the indicator system^10,11,12,13, constructing a multi-index system to explore the sustainable development of common prosperity. (2) Research area: A series of common prosperity studies has been conducted at national¹⁴, provincial⁶, city⁷, and county¹² levels. These studies have explored the extent to which the urban–rural gap, regional gap, and income gap in common prosperity manifest themselves in different research scopes, and some solutions have been proposed. (3) Driving mechanism: Existing research includes the following two categories: The first category is the impact of a single factor on common prosperity. Relevant studies have analyzed the driving mechanism for common prosperity from single perspectives, such as the new urbanization⁶, the digital economy¹⁰, the transformation of rural development factors¹², and the carbon emission intensity¹⁴. The second category is the compound driving mechanism of multiple factors for common prosperity. Specifically, the driving mechanism of common prosperity has been analyzed based on multiple factors, such as green finance and environmental pollution¹⁵, labor processes, and value appreciation processes¹⁶. In general, existing study on driving mechanisms of common prosperity is scattered and complex. Moreover, few studies have integrated the relevant driving factors into a unified analytic framework.

Research related to the digital economy

The digital economy, a new paradigm for economic growth in the digital age, is crucial to the attainment of shared prosperity. Tapscott was the first to propose the concept of “digital economy” in 1994¹⁷, and many scholars have continued to conduct research on this topic. Current research mainly focuses on (1) concept interpretation. In a narrow sense, the economic behaviors covered by the digital economy are constantly supplemented, and the core role of the economic sector is continuously emphasized upon. The basis for the realization of the digital economy is also stressed in the process of developing the digital economy¹⁸, and a component of the digital economy is e-commerce¹⁹. Owing to the ongoing growth of digital economy, several nations and areas have started concentrating on legislative initiatives that would support it²⁰. They believe that innovation is essential for the growth of the digital economy²¹. The digital economy is one that primarily relies on digital technology, in particular, electronic transactions conducted over the Internet²². The term digital economy can refer to a wide range of economic activities that use data, either directly or indirectly, for direct resource allocation and encourage the growth of productivity²³. To date, no unified consensus has been reached on the connotation of the digital economy. The term digital economy has been interpreted differently in each country at various points in time (2) Research area: The digital economy has been analyzed based on the Yangtze River Delta²⁴, the Beijing–Tianjin–Hebei region²⁵, as well as at provincial²⁶, city²⁷, and state levels²⁸, to explore the role of the digital economy in promoting national economic sub-regions (3) Construction of evaluation system: The two most popular techniques for assessing the performance of the digital economy are the single indicator approach and the multi-dimensional indicator method. The former is limited to information and communication technology and e-commerce^29,30, which are used to measure whether productivity has significantly ameliorated the situation of the digital economy. The latter primarily aids in the development of a digital economy level indicator system focusing on aspects such as digital infrastructure³¹, digital industrialization, industrial digitization, potential for digital innovation³², and digital economic activities³³. Subsequently, research is conducted based on this framework. In general, current research often focuses on using national or metropolitan areas as case study regions, overlooking the specific issues related to the development of digital economy in river basins. These river basins exhibit significant spatiotemporal heterogeneity and internal spatial constraints, which are unique compared to other areas. Moreover, the research on the differentiation of spatial pattern evolution in the digital economy within these basins still lacks.

Research related to the digital economy empowering common prosperity

At present, numerous studies are related to the research on the common prosperity and digital economy. China’s 14th Five-Year Plan for National Economic and Social Growth and Long-range Objectives through the Year 2035 outlines three steps that the country will take to accelerate digital development, create a digital China, and realize the ideal of China’s common prosperity. Expansion of the digital economy is a key factor in the process of achieving common prosperity¹⁵. Considering the impact of the digital economy on common prosperity, this study examines the direct impact of the digital economy on shared prosperity. The eradication of regional disparities is necessary for the development of common prosperity. The Yellow River Basin City exhibits huge distinctions in economics, society, culture, and natural conditions. The digital platform that was established by the digital economy has significantly reduced the threshold and cost of regional economic development, giving the opportunity to equally create wealth and share the “digital dividend”³⁴. Different data element configuration methods and data usage fees³⁵ affect the welfare effect and distribution effect of common prosperity. On the other hand, this research also analyzes the indirect mechanism through which the digital economy affects common prosperity. The development of the digital economy plays an important role in alleviating the current imbalance among regional development¹⁵, optimization of the social organization of the labor process¹⁶, and improvement in regional innovation capabilities³⁶, thus driving common prosperity development. Furthermore, numerous academics have investigated how the digital economy promotes and inhibits common prosperity from the standpoints of both its growth and decline²⁹. In general, not many pertinent studies have been carried out on how the digital economy promotes shared wealth. Undeniably, a lot more systematic explorations are further demanded to theoretically and empirically investigate how the digital economy promotes common prosperity, which will be pursed in the future.

Theoretical analysis and research hypotheses

Impact of the digital economy on common prosperity

The digital economy is a burgeoning economic structure that is predicated on the Internet and big data. The digital economy uses Internet platforms and network clients as the main carriers to convert original core production factors into data resources and promote profound changes in production and lifestyles³⁷. Common prosperity is a direct reflection of “sharing” and “affluence” based on extensive consultation, joint construction, and sharing, and the ultimate goal is to reduce the gap. The “sharing” and “affluence” mechanisms are the two main topics of this study that describe the impact of the digital economy on shared prosperity. Furthermore, this study incorporates the notion of “sustainability” to investigate how the digital economy impacts the sustainable advancement of common prosperity (Fig. 1).

Fig. 1

Analysis chart of the digital economy and common prosperity mechanism.

The data-sharing characteristics of the digital economy directly impact common prosperity and help to realize the “sharing” objective of common prosperity. The time and expense associated with acquiring information decrease through information sharing based on the Internet and big data. Furthermore, the gap between regions in the process of achieving common prosperity is gradually bridging. In the information age, the continuous popularity of Internet platforms and network clients makes accessing information more convenient, and this makes an important contribution to narrowing the economic gap between cities. Digital resources continue to advance industrial digitization and digital industrialization, and they decrease the inhibitory impact of natural factors (such as topography) on economic growth between areas.

The digital economy influences lifestyle and manufacturing, thereby advancing the realization of the goal of “affluence” in common prosperity. As a new economic growth model, the digital economy not only advances emergence of new industries, but also reforms the real economy. The digital economy has spawned many new models, new business formats, new products, and new technologies. Further, it can complement, optimize, and combine industrial data and industrial entities to add value, tap new business opportunities and new value for enterprises, and aggressively encourage the economical growth³⁸. The digital economy has produced an economic climate that consistently aids in advancing regional economic growth and achieving the goal of “affluence” in common prosperity.

Through the “sustainability” mechanism of its operations, the digital economy continuously provides the means to achieve shared prosperity. In the information age, the digital industry can continuously drive economic productivity³⁹, thereby promoting the continuous development of the regional economy. The digital industry is also an important manifestation of the “sustainability” of common prosperity, improving the regional economic development model through digital industrialization and industrial digitization and injecting digital features. In short, the digital sector keeps pushing toward the achievement of common prosperity. Consequently, this research puts forward the following hypothesis:

Hypothesis 1: The digital economy in the Yellow River Basin actively promotes the realization of common prosperity goals.

The spatial spillover effect of the digital economy on common prosperity

Under the joint action of Moore’s Law and Metcalfe’s Law⁴⁰, the digital economy shows both a direct mechanism and a certain spatial spillover impact on common prosperity. First, through special network diffusion effects and external effects, the digital economy on one hand eliminates the “digital divide” caused by the geographical distance between cities, thereby promoting regional economic cooperation and win–win results. On the other hand, the digital economy is also facing competition for limited digital resources between regions. In these cases, the digital economy further widens the “digital divide”, further agglomerates regional resources, and additionally expands regional differences, all of which inhibit the evolution of common prosperity in surrounding cities. Second, the essential attributes of the digital economy accelerate information sharing and wealth circulation between regions. As the Yellow River Basin spans the upper, middle, and downstream provinces, there are differences in policies and economic differences between cities in each section. The digital economy promotes coordinated development among cities within the Yellow River Basin. This is carried out by focusing on digital resources as the foundation of industrial innovation and then promoting the realization of common prosperity through network diffusion effects and external effects. Finally, the incorporation of the Internet to the economic development model is conducive to improving the level of innovation. Through the continuous development of the digital economy, ability of enterprises to obtain information has been significantly improved; and their innovation efficiency has also been improved. Faced with different economic conditions, multi-level innovation mechanisms should be adopted to maintain a good economic innovation model, thereby promoting common prosperity in the region. Based on this, this article puts forward the following hypothesis:

Hypothesis 2: The digital economy in the Yellow River Basin affects the realization of common prosperity in surrounding areas through spatial spillover effects.

Regional heterogeneity of the digital economy’s impact on common prosperity

Topography of the Yellow River Basin is more elevated in the west and less in the east. The upper reaches are covered with snow throughout the year and have developed glacial landforms. The middle reaches consist of loess landforms with serious water and soil erosion, and the lower reaches are primarily composed of the Yellow River alluvial plains. Different from other economic regions, the Yellow River Basin is a multi-scale, geographically-integrated region composed of overlapping physical geographical units, economic regional units, and administrative regional units⁴¹. Moreover, there exist a fair number of irrational phenomena in the economic structure and rather slow economic development occurs along the Yellow River. The overall economic development efficiency is not very good; the industrial structure is heavy; and the imbalance between upstream and downstream evolution is a major problem^42,43. There are also differences in the digital economy’s level and the way in which different flow segments of common prosperity of the digital economy between cities operate. Based on this, this article puts forward the following hypothesis:

Hypothesis 3: There is regional heterogeneousness in the impact of the digital economy on common prosperity in the Yellow River Basin.

Study design and model construction

Study area

The Yellow River, the nation’s mother river, flows through the eastern, central, and western key areas of China. The Yellow River flows from the west of China to the east through nine provinces, namely, Qinghai, Sichuan, Gansu, Ningxia, Inner Mongolia, Shaanxi, Shanxi, Henan, and Shandong. Based on the natural background, the socioeconomic ties of the Yellow River, and drawing from preceding studies^44,46, this study considers Qinghai, Gansu, Ningxia, Inner Mongolia (excluding eastern Mongolia), Shaanxi, Shanxi, Henan, and Shandong as the eight sampled provinces. Excluding cities with missing data, in total, 74 prefecture-level cities are used as research units (Fig. 2) The Yellow River Basin is rich in mineral resources and is an important source of raw materials and energy. The area is also a base for the chemical industry and basic industries in China⁴⁷, as well as an important area for major national strategies (such as poverty alleviation and coordinated regional development) and the “Belt and Road Initiative”⁴⁸. Moreover, the Yellow River Basin is the lifeblood and foundation of economic and social development in northern China. The provinces and regions through which the Yellow River flows account for “half of the northern economy”. Specifically, in terms of the northern region, the Yellow River Basin accounts for 57.72% of its permanent population, 55.84% of the total GDP, 48.93% of local fiscal general budget revenue, and 61.9% of the fixed asset investment in the entire society⁴⁹. This research effectively addresses the challenges of sustainable development in the Yellow River Basin, investigates the mechanism and spatial spillover effect of the digital economy on common prosperity in the region, and offers innovative ideas for high-quality development and ecological preservation in the region.

Fig. 2

Diagram of the Yellow River Basin. Note This map was created using ArcGIS 10.8 software, developed by Esri. URL link: https://www.esri.com/en-us/arcgis/products/arcgis-desktop/overview.

Data source

This research examines the spatial spillover impact and mechanism of the digital economy on common prosperity by using panel data (from 2005 to 2020) from 74 cities in eight provinces in the Yellow River Basin, considering data validity and availability. The “China Urban Statistical Yearbook”, “China Energy Statistical Yearbook”, and “China Agricultural Statistical Yearbook” are the primary sources of data. The missing data for certain years were supplemented by using the linear difference approach. The number of patent applications was obtained from the State Intellectual Property Office (https://www.cnipa.gov.cn/). The carbon emissions data were obtained from China’s Carbon Emission Accounts and Datasets (https://www.ceads.net.cn/data/), and the air circulation coefficient was obtained from the Climate Data Store (https://cds.climate.copernicus.eu/).

Model construction

Baseline model and spatial Durbin model

As per the objective of this study and variable settings of this article, this study aimed at confirming the direct influence of the digital economy on the evolution of common prosperity and elucidated the impact of the digital economy on common prosperity by drawing upon the research ideas of previous academics¹¹, the following benchmark regression model is constructed:

$$Cp_{it} = y_{0} \, + y_{1} Ec_{it} + y_{2} control_{it} + \sigma_{i} + \tau_{t} + \varepsilon_{it}$$

(1)

where Cp_it represents the common prosperity level of city i in year t; Ec_it represents the digital economic level of city i in year t; y₁ is the regression coefficient of the independent variable; control_it is the set of model control variables; y₀ is the constant of the benchmark regression equation term; y₂ is the core explanatory variable estimated coefficient; σ_i is the city fixed effect; τ_t is the year fixed effect, and ε_it is the error term.

The spatial econometric model considers the spatial connections between individuals based on the traditional econometric models and shows unique advantages in examining spatial dependence and spatial spillover effects⁵⁰. In order to explore the space spillover effect of digital economy in the Yellow River basin in promoting common prosperity, by integrating a spatial weight matrix into the baseline model (1), the Spatial Durbin Econometric Model (SDM) was further constructed. The SDM considers the characteristics of the spatial lag model (SLM) and the spatial error model (SEM) and is a more applicable general form. Consequently, this study investigates the spatial spillover effect of the digital economy on common prosperity by using the spatial Durbin model. When selecting the distance matrix, the digital economy breaks the original spatial geographical restrictions and closely connects economically-related regions. In this study, an economic distance matrix is constructed, by selecting the reciprocal of the absolute value of the difference in GDP per capita between cities as the spatial weight⁵¹. The specific formula is as follows:

$$Y_{it} = \, l_{0} + \rho WY_{it} \, + \theta_{1} WX_{it} + \beta_{1} X_{it} + \sum {\beta_{z} } Z_{it} + \theta_{z} W\sum {Z_{it} } + \, \gamma_{i} + \delta_{t} + \varepsilon_{it}$$

(2)

$$\varepsilon_{it} = \lambda W\varepsilon_{it} + \zeta_{it}$$

(3)

where l₀ represents the constant term; Z_it denotes the control variables; i stands for cities, t stands for years; Y_it is the dependent variable, while X_it is the independent variable; ρ represents the spatial autocorrelation coefficient, ranging from − 1 to 1; β₁ represents the coefficient of the independent variable, and β_z represents the coefficient of the control variable; W signifies spatial weight; ρWY_it indicates the impact of the dependent variable from other regions; θ₁WX_it represents the impact of the independent variable from other regions; θ₁ is the coefficient of the spatial lag of the independent variable; θ_z represents the coefficient of the spatial lag of the control variable; γ_i and δ_t, respectively, denote individual and time fixed effects; ε_it is the random error term, with Wε_it representing the spatial effect of the error term, and λ denotes the coefficient of the spatial lag of the error term; ζ_it = N( 0, σ² I_n)⁵².

Mechanism test model

To further investigate the mechanisms through which the digital economy influences common prosperity, this study analyzes the moderating effects of the digital economy on achieving common prosperity from three perspectives: the sharing mechanism (Shar), the affluence mechanism (Aff), and the sustainability mechanism (Con). The mediation effect is employed to establish a regression model, with the specific formula as follows:

$$Cp_{it} = \alpha_{0} + \alpha_{1} Ec_{it} + \phi X + \varepsilon_{it}$$

(4)

$$M_{it} { = }\beta_{{0}} { + }\beta_{{1}} Ec_{it} { + }\lambda X{ + }\varepsilon_{it}$$

(5)

$$Cp_{it} = \, \mu_{0} \, + \mu_{1} Ec_{it} \, + \mu_{2} M_{it} + \mu X + \, \varepsilon_{it}$$

(6)

In this context, M_it represents the mediating variable; X denotes the control variables; α₀, β₀, and μ₀ are the intercept terms; α₁, β₁, and μ₁ are the regression coefficients for the digital economy; φ, λ, and μ are the regression coefficients for the control variables⁵³.

Variables

Dependent variables

Common prosperity level (Cp): Common prosperity can be decomposed into wealth creation and wealth distribution⁵⁴, including the common prosperity of the nation and the sharing of results by all residents^13,55. Common prosperity focuses on overcoming relative poverty and solves the inclusive issues of efficiency and fairness from the perspective of distribution^56,57,58. Promoting the complete growth of people and ultimately achieving a higher quality of life for people is the fundamental value^59,60. Common prosperity includes two meanings of sharing and prosperity. It consists of income target, social equity and justice goal, and comprehensive development of people. Continuous efforts are required to be devoted to eliminate the gap between rural and urban areas as well as regional and income gaps to achieve fairness and prosperity for all the people. China will continue to devote extensive efforts to eliminate the urban–rural gap, regional gap, and income gap, to attain the goal of prosperity and fairness for all the people. With regard to the above-mentioned aspects, welfare is the direct manifestation of common prosperity, and sustainability is what propels the ongoing growth of common wealth, with sharing serving as its fundamental component. The three interact to jointly promote the improvement of common prosperity (Fig. 3).

Fig. 3

Common prosperity and digital economy evaluation basis.

Building upon references^{54,55,56,57,58,59,60}, a comprehensive evaluation index system for common prosperity was developed, focusing on the aspects of welfare, shareability, and sustainability. This system comprises three primary indicators, nine secondary indicators, and 13 tertiary indicators. The weights of these indicators were determined by the entropy method (refer to Table 1). Welfare is gauged by the degree of urban prosperity and sharing is assessed through urban cultural education, infrastructure, informatization level, and citizen engagement. In contrast, sustainability is evidenced by urban digital applications, financial stability, ecological health, and technological innovation, all indicative of the steady progression of urban shared prosperity (Cp).

Table 1 Evaluation index system of common prosperity in the Yellow River Basin.

Independent variables

Digital economy level (Ec): The digital economy, with digitized information as a key element⁶¹, modern information networks as a vital carrier⁶², and structural optimization as a crucial driving force⁶³, gives rise to new economic activities⁶⁴, accelerating the transformation of production, lifestyle, and economic structure into a novel economic paradigm⁶⁵. Based on this, the development of the digital economy considers digital infrastructure as the carrier, digital industrialization and digital economic activities as the content, and digital innovation potential as the driving force (Fig. 3).

According to the related literature^{61,62,63,64,65}, an evaluation index system was formulated for the digital economy across four dimensions, namely, digital infrastructure, digital industrialization, digital economic activities, and digital innovation potential. Among them, digital infrastructure highlights the emphasis laid down by the city government on the development of the digital economy through Internet penetration and the number of mobile Internet users. Digital industrialization presents degree of response of the regional economic industries to digitalization in terms of relevant practitioners, digital industry penetration rate, and Internet-related output. Digital economic activities show the degree of social participation in the digital economic process through talent reserves and economic vitality. Digital innovation potential, in particular, through spending on scientific research and innovation potential, demonstrates the potential for growth and vitality of the digital economy. A comprehensive evaluation index system for the digital economy was thus constructed, and the weights of the indicators were calculated by the entropy method (see Table 2).

Table 2 Digital economy evaluation index system of the Yellow River Basin.

Control variables

Building on existing research findings, this study selected five representative control variables that could potentially impact the development of common prosperity (Table 3): (1) Industrial structure (Is) is important because it is a fundamental component of economy. One benefit of modernizing the industrial structure is that it encourages quick regional economic expansion. Furthermore, the cleanliness of the industrial structure reduces the economic differences between river basins. The ratio of the added value of the tertiary industry to the added value of the secondary industry was used to express the industrial structure level⁶⁶. (2) Government scale (Gov): As an exogenous variable, government policy regulation has exceptional inherent advantages and a two-sided impact. First, government policy regulation shows a good path breakthrough and path creation effect on path locking. Second, whether the government regulation is correct or not is crucial to regional development. Degree of government intervention is expressed as fiscal expenditure’s ratio to GDP⁶⁷. (3) Informatization level (Infor): The information era has given rise to the digital economy, and the degree of informatization indicates the level of economic development. The level of informatization lays a solid digital infrastructure foundation for the development of the regional digital economy and promotes regional economic informatization and industry. Herein, digitizing is expressed by the total volume of postal and telecommunication services per capita¹⁰. (4) Terrain conditions (Tco): Terrain conditions are traditional economic factors. On one hand, good terrain conditions promote regional economic development. For example, resource that shares efficiency between cities in plain areas is higher than those in mountainous areas and plateau. On the other hand, complex terrain conditions exhibit a certain inhibitory effect on regional economic ties and resource sharing. This study uses terrain relief as an index to measure terrain conditions⁶⁸. (5) Housing level (Hp): The housing level of different cities in different periods reflects, to varying degrees, the vitality and potential of the economic development of the cities. An improvement of the housing level continues to promote the realization of the goals of a digital economy and common prosperity. This variable is characterized in this study by urban commercial housing sales⁶.

Table 3 Descriptive statistics of the variables.

Analysis of empirical results

Baseline regression analysis

According to formula (1), the benchmark regression results are presented in Table 4. The coefficients of the digital economy are positively significant at the 1% level, suggesting that the digital economy in the Yellow River Basin facilitates the development of common prosperity. Hypothesis 1 is thereby confirmed. Regarding the control variables, the industrial structure did not pass the 10% significance test and is positive, suggesting that optimizing the industrial structure may contribute to achieving common prosperity. Government scale and terrain conditions are negative at the 1% significance level, indicating that both inhibit common prosperity. Informatization level and housing level are positive at the 1% significance level, playing a crucial role in promoting the achievement of common prosperity.

Table 4 Benchmark regression results.

Analysis of spatial spillover effects

Spatial autocorrelation test

There may be a significant correlation between the digital economy and common prosperity in the Yellow River Basin. To rigorously examine the spatial relationship characteristics between the digital economy and common prosperity, a spatial autocorrelation model is employed. The spatial autocorrelation analysis on the digital economy and shared prosperity in the Yellow River Basin was carried out by using Geoda software, and the corresponding test results are presented in Table 5. The p-values of the digital economy and common prosperity both passed the significance test at the 1% level, indicating that a significant spatial correlation occurs between the two. There is also an agglomeration phenomenon in areas with similar degrees of common prosperity and digital economy. From 2005 to 2020, Moran’s I index of the digital economy and common prosperity in the Yellow River Basin demonstrated a decreasing tendency. This finding indicates that both common prosperity and the digital economy showed a spatial correlation trend of weakening agglomeration.

Table 5 Statistical results of the Moran’s I index for 2005–2020.

The Yellow River Basin’s common prosperity and digital economy’s temporal and spatial distribution patterns

The distribution of common prosperity and digital economy grades in the Yellow River Basin in 2005, 2010, 2015, and 2020 was visually analyzed by using ArcGIS software. Four categories of cities were identified, namely, low-level, medium–low-level, medium–high-level, and high-level, by using the natural breaking point approach. Figure 4 illustrates that, in general, the commonwealth level of the Yellow River Basin shows the basin characteristics of the downstream area (0.275) > the midstream area (0.138) > and the upstream area (0.094). The wealth level also transforms from discrete distribution to a spatial aggregation state. The analysis of evolutionary types indicates that the number of low-level, medium–low-level, medium–high-level, and high-level cities evolved from 16, 40, 8, and 10, respectively, in 2005, to 10, 38, 14, and 12, respectively, in 2010. Then, the numbers evolved into 16, 40, 11, and 7, respectively, in 2015, and into 20, 38, 9, and 7, respectively, in 2020. On one hand, the number of medium- and high-level cities continued to decrease, while the number of low-level and land-level cities continued to increase. This reflects the urgent need to improve the physical efficiency of common prosperity in the Yellow River Basin. On the other hand, as high-level cities and medium–high-level cities gradually became spatially connected, the club convergence effect continued to become more prominent. This effect is bound to continuously affect the improvement in the common prosperity of surrounding cities through spatial spillover effects.

Fig. 4

Distribution chart of the common prosperity level. Note This map was created using ArcGIS10.8 software, developed by Esri. URL link: https://www.esri.com/en-us/arcgis/products/arcgis-desktop/overview.

Figure 5 demonstrates that, in general, the digital economy level is spatially differentiated in a noticeable way that follows a clear growth pattern of downstream areas (0.193) > midstream areas (0.077) > and upstream areas (0.027). An analysis of evolutionary types revealed that in 2005, there were 16 low-level cities, 40 medium–low-level cities, 8 medium–high-level cities, and 10 high-level cities. By 2010, these numbers had changed to 10, 38, 14, and 12 cities, respectively. In 2015, the trend continued with 16, 40, 11, and 7 cities, and by 2020, it further evolved to 20, 38, 9, and 7 cities, respectively. The number of medium- and high-level cities experienced a process of first rising and then falling, illustrating how the digital economy of the Yellow River Basin has developed, moving from spatial diffusion to spatial agglomeration. Interestingly, the lower reaches of the Yellow River are home to the majority of the medium- and low-level cities, whereas the middle and upper reaches are home to the medium–high-level and high-level cities. The digital economy of the Yellow River Basin is expected to become even more spatially differentiated in the future.

Fig. 5

Digital economy level distribution map. Note This map was created using ArcGIS10.8 software, developed by Esri. URL link: https://www.esri.com/en-us/arcgis/products/arcgis-desktop/overview.

Results of the spatial Durbin model

Before conducting the spatial regression analysis, LM and Hausman tests were conducted on the common prosperity and digital economy data to select the fixed effects model. According to the findings of the Wald and LR tests, the SDM model cannot be degenerated into the SEM and SAR models. As a result, the optimal fit model identified was the SDM fixed effects model, which was selected for statistical analysis in this study.

Table 6 Results of the spatial Dubin model regression.

Table 6 presents that both Ec and W × Ec pass the test at the 1% significance level. The digital economy contributes significantly to the achievement of shared prosperity and positively influences the growth of neighboring cities while other control variables remain unchanged. Common prosperity also produces spatial spillover effects. The ρ value in the results is positive and significant at the 5% level. This finding indicates that the factors that affect the realization of common prosperity of a city include not only the city’s own related factors, but also the development level of neighboring cities. The industrial structure intervention coefficient is negative and significant at the 1% level when analyzed with the control variables. This research indicates that the urban-industrial structure of the Yellow River Basin may be a hindrance to the achievement of shared prosperity. The long-term extensive development model has brought forward several challenges, including heavy industrialization, predominance of resource-based industries, and insufficient growth in the tertiary sector, in the Yellow River Basin. These issues present a significant obstacle in achieving common prosperity. In particular, cities such as Jinchang, Yulin, Yan’an, and Jiayuguan are affected by structural problems in their industries, leading to lower levels of common prosperity. Further, although the government scale intervention’s coefficient is positive, it is insignificant. This result suggests that the key to solving the problems of the Yellow River Basin, which include a high percentage of resource-based cities and noticeable industrial structure-heavy features, is to figure out how to scientifically use macro-control powers of the government. The information level intervention coefficient is positive at the 1% level. Significantly, as a typical indicator of digitalization, the level of informatization promotes the scale and speed of information circulation within the Yellow River Basin, resulting in a steady increase in resource sharing and information exchange among cities within the basin. Cities such as Zhengzhou, Qingdao, Xi’an, and Jinan exhibit a high level of informatization, which in turn contributes to a higher level of common prosperity. The intervention coefficient of topographical conditions is negative and significant. Given the significant terrain fluctuations in the Yellow River Basin, the development of common prosperity remains constrained by traditional regional limitations. The key challenge lies in leveraging the digital economy to overcome these geographical constraints within the basin, a pressing issue that requires urgent attention. Cities with significant terrain variations, such as Tianshui, Guyuan, Ankang, and Baiyin, experience hindrances in the development of common prosperity. The intervention coefficient of housing level is positive and significant at the 1% level. The high sensitivity of housing standards to the economic development level in the basin is evident in their rapid response to economic variations, reflecting consumption tendencies of residents. The steady improvement in housing standards indicates an increase in consumption levels of urban residents, leading to investments in fixed assets and a continuous improvement in living standards. Cities such as Qingdao, Zhengzhou, and Xi’an exhibit a high level of housing standards, which continually promote the realization of common prosperity. Thus, Hypotheses 1 and 2 are verified.

The direct and indirect effects can be combined to form the overall spatial effect by partial differential computation. The geographical spillover impact is the indirect effect⁶⁹. The digital economy contributes significantly to the common prosperity of the city as a whole, as evidently presented in Table 7. The direct influence of the independent variables Ec is positive. The negative indirect impact indicates that the digital economy is impeding the attainment of shared prosperity in neighboring cities. Considering both the direct and indirect effects of the digital economy, there is still a major push toward the fulfillment of common prosperity through the digital economy, consistent with the conclusions drawn from the benchmark regression. As a result, Hypotheses 1 and 2 are again verified.

Table 7 Results of direct, indirect, and total effects regression of the spatial Dubin model.

Heterogeneity analysis

Different from other economic regions, the Yellow River Basin is a multi-scale, geographically deeply-integrated region. In addition to the relatively sluggish pace of economic growth along the Yellow River, uneven development in the high, middle, and lower sections of the basin is a major issue. Urban development imbalances might have led to some variability in the way the digital economy plays a role in achieving common prosperity across various cities and river segments. Therefore, this study divides 74 cities in the Yellow River Basin into three categories, namely, upstream, midstream, and downstream cities. Heterogeneity detection was performed separately. Table 8 presents that analysis of the heterogeneous regression results demonstrates that there is still a beneficial influence of the development of the digital economy on the fulfillment of common prosperity. Only an insignificant trend was shown in upstream cities, but a restraining trend on surrounding cities was shown in terms of spatial spillover effects. The possible reasons are as follows: Owing to the influence of industries, traditional heavy industry continues to be essential for the economic growth of cities in the upper portions of the Yellow River Basin, and the area is in the transition period of industrial transformation. The digital economy, being a new sector, shows little effect on established sectors. Midstream cities as a whole have a better economic foundation and are at the same level of development during the growth and expansion of the digital economy. The achievement of common prosperity in the city is significantly impacted by the spatial spillover effect, which shows little impact on neighboring cities. Downstream cities have a good economic foundation, and high levels of informatization and digital infrastructure. Herein, the active promotion of common prosperity may be greatly aided by the digital economy. However, the spatial spillover effect on surrounding cities is still suppressed, which may be due to cities competing for digital resources. It indicates that the impact of the digital economy on the attainment of shared prosperity varies depending on the area of the city. Hypothesis 3 is thus verified.

Table 8 Analysis of regional heterogeneity.

Mechanism analysis

The findings of the analysis of benchmark regression indicate that the digital economy actively works to realize common prosperity in cities. The mechanism of the digital economy for fostering common prosperity was examined in more detail by analyzing it from three different angles: sharing mechanism (Shar), affluence mechanism (Aff), and sustainability mechanism (Sus).

In addition to encouraging the overall achievement of common prosperity, the digital economy also somewhat encourages the Shar, Aff, and Sus that make up common prosperity. Among them, the role of Shar involves the improvement of public infrastructure, public services, and other social benefits that all people can enjoy. The proxy variable for the intermediary effect of Shar is the number of participants with urban basic medical insurance⁷⁰. The regression findings are displayed in Columns (1) and (2) of Table 9. The degree to which the growth of the digital economy continues to encourage urban sharing is presented as the digital economy coefficient in Column (1), which is notably positive at the 1% level. At the 1% level, the coefficient of Shar is considerably positive, according to the regression results presented in Column (2). This result suggests that via influencing the level of urban sharing, the digital economy helps in realizing common prosperity.

Table 9 Mechanism analysis results.

Regarding the contribution of Aff to raising the standard of living for all urban residents, per capita deposits serve as a proxy for the agent variable of intermediary impact of Aff⁷¹. The data in Column (3) present that the digital economy may effectively encourage the spending and flow of money of the urban inhabitants, as evidenced by the fact that the coefficient is notably negative at the 1% level. The findings in Column (4) demonstrate that Aff’s coefficient is significantly positive at the 1% level, suggesting that Aff raises consumption levels of urban inhabitants, effectively improves the efficiency of wealth creation and the degree of wealth sharing, and thereby promotes the realization of common prosperity.

The Sus mainly improves quality of life of residents, reduces pollutant emissions, and creates a virtuous cycle of sustainable development by changing the traditional industrial structure. The agent variable of the Sus intermediary effect is characterized by exhaust gas emissions per unit of GDP⁷². The data presented in Column (5) show that at the 5% threshold, the digital economy coefficient is notably negative. According to this research, the digital economy shows the potential to significantly reduce exhaust gas emissions per GDP unit and support the sustainable growth of urban enterprises. At the 5% level, the Sus’s coefficient is notably positive, as indicated by the figures in Column (6). This finding indicates that the Sus promotes the sustainable development of urban industries, effectively improves resource utilization efficiency and sustainable urban development, and thereby promotes common prosperity. Hypothesis 1 is thus again proven to be true.

Endogeneity test

Given the potential for crucial variables to be overlooked and the plausible bidirectional causality between the digital economy and common prosperity, this study expands upon the foundational regression model. The model incorporates the lagged one-period level of digital economic development as an instrumental variable and utilizes the Difference Generalized Method of Moments approach for regression analysis to address endogeneity concerns. The regression findings are detailed in Table 10, revealing a digital economy coefficient of 0.986, which remains statistically significant at the 1% level. Rejections of tests for instrumental variable weakness and under-identification underscore the efficacy of instrumental variable selection. These outcomes underscore the substantial role of the digital economy in promoting common prosperity, even amidst considerations of endogeneity.

Table 10 Endogeneity test results.

Robustness analysis

Two techniques were employed to perform robustness tests to guarantee the stability of the regression findings. Confirming the influence of the digital economy on the attainment of common prosperity was the main objective of this study. First, the core variable was replaced, and Peking University’s digital inclusive financial index was used to replace the digital economic index⁷³. The digital financial index is a crucial gauge of the state of the digital economy as it considers all of the many facets of digital finance. The findings are displayed in Column 1 of Table 11. The substantial impact of the digital economy on the advancement of common prosperity remained unchanged in the robustness test. Second, the spatial weight was replaced. For robustness testing, the spatial weight matrix and the economic geography nested weight matrix were selected³⁷. The product of the economic and geographical distance weights was the nested matrix. Table 11 lists the results of the regression in Column (2). The findings demonstrate that even with varying spatial weight matrices and considering the entire context of physical location and economic distance, the digital economy continues to have a major positive influence on the attainment of common prosperity. This result again demonstrates the resilience of conclusion. Third, the control variables were adjusted, and the government size was removed from the analysis as it did not show a significant impact on common prosperity in the research results. Subsequently, a testing analysis was conducted. The regression results are presented in Table 11, Column (3), which indicate that the significant effect of the digital economy on the development of common prosperity remains unchanged. It suggests that the previous research results demonstrate good robustness.

Table 11 Robustness test result.

Discussion and research findings

Discussion

The digital economy of the Yellow River Basin shows fundamental coherence with shifts in the area and periods of common prosperity. In the development process, the digital economy breaks traditional economic constraints and promotes the formation of emerging industries. The sharing and accessibility of digital resources continue to reduce regional and urban differences and encourage common prosperity. In the digital age, the significant correlation between common prosperity and the digital economy opens a new path for realizing common prosperity. Other parts of China and even other nations have prospects, attributed to the positive feedback loop of reciprocal development and promotion between the digital economy and common prosperity in the Yellow River Basin. The development of the digital economy in urban areas promotes common prosperity; nonetheless, it also inhibits this development in surrounding cities, because urban centers exploit digital resources. When urban areas achieve a higher level of digital economic development, urban centers attract resource aggregation from neighboring regions, resulting in a digital divide and significant reduction in the level of common prosperity in adjacent cities.

Government intervention is not significant in the Yellow River Basin. The government should act appropriately to address a number of issues brought forward by the digital divide, impose a route of breakthrough and path creation impacts, and encourage the coordinated growth of common prosperity. The influence of the digital economy on common wealth shows significant regional differences. An example of a region undergoing multi-scale changes in its ecological, social, and economic systems is the Yellow River Basin. Traditional heavy industry still accounts for a high proportion of the industries in the upper reaches of the Yellow River, and economic transformation continues to face severe challenges. The midstream region consists of a high proportion of resource-based cities, and the process of common prosperity in the future will face both resource and environmental constraints. Although the economic development trend of the downstream areas is relatively good, these areas are facing a superposition of the “adaptation period” of growth rate changes, the “pain period” of structural adjustment, and the “digestion period” of policy stimulus. The digital economy also presents differences and stages in different sections of the Yellow River Basin. “Adapting measures to local conditions” and “adapting measures to time conditions” are steps that can be taken to advance the digital economic growth model in the Yellow River Basin and offer a “Chinese model” for bringing about global common prosperity.

The digital economy continually promotes the achievement of common prosperity through the employment of Shar, Aff, and Sus as intermediaries. This conclusion is consistent with the views presented by Zhou et al. The resource-sharing nature of the digital economy propels the implementation of sharing mechanisms, continually fostering the development of urban economies and establishing conditions for prosperous mechanisms. The sustained innovativeness of the digital economy serves as the core driving force for these mechanisms. By refining income distribution mechanisms, the digital economy promotes the inclusive sharing of development outcomes, thus tackling issues of insufficient and unbalanced development and contributing to the advancement of common prosperity¹⁰. The digital economy affects common prosperity through intermediary mechanisms, providing multiple pathways for achieving it and offering alternative implementation mechanisms for other regions. Analysis of these mechanisms identifies the external environment and policy requirements necessary for achieving common prosperity, thus providing multiple practical bases for its global realization.

Noteworthy, the primary focus of this study is the investigation of the spatial spillover impact and mechanism of the digital economy and common prosperity from a watershed perspective. Various perspectives are considered while examining the impact of the digital economy on common prosperity, and the fundamental characteristics of common prosperity are highlighted. Scale correlation and spatial dependence are introduced into pertinent research viewpoints, and the spatiotemporal distribution characteristics of the digital economy and common prosperity are also analyzed in this study. Owing to limitations in data acquisition and lack of control variables from multiple angles, future studies might investigate the paths and connections between the digital economy and common prosperity, broaden the variety of control variable selection, and offer more alternatives for regional development. Further, future studies can examine the relationships and channels of interaction between the digital economy and common prosperity and offer more suggestions for the harmonious growth of both.

Conclusions and policy implications

This study experimentally examines changes in the geographical shape of the digital economy and common prosperity using data from 74 prefecture-level cities in the Yellow River Basin (data from 2005 to 2020). Furthermore, the effects and mediating role of the digital economy on common prosperity are also examined, and the following conclusions are drawn: First, common prosperity and the level of the digital economy of the Yellow River Basin both show the characteristics of watershed in the downstream area, midstream area, and upstream area. This finding indicates that an obvious spatial correlation exists between the two. Nonetheless, the ongoing decline in the quantity of medium- and high-level cities in both regions is indicative of the difficult path ahead to enhancing the standard and efficacy of the digital economy to foster common prosperity. Second, the digital economy not only directly impacts common prosperity, but also influences its development through spatial spillover effects. Among the control variables, informatization level and housing level play a significant promoting role. Third, clear geographical variation is observed in how the digital economy affects common prosperity in the Yellow River Basin. More specifically, common prosperity of downstream cities is most significantly impacted by the digital economy. The “beggar-thy-neighbor” nature of geographical spillover effect of the digital economy on common prosperity is evident. Finally, by establishing an intermediary mechanism, this study verifies that the digital economy promotes the realization of common prosperity by leading to a sharing mechanism, an affluence mechanism, and a sustainable mechanism. In response to these conclusions, this article makes the following recommendations:

• (1) Improvement of regional economic development and firm grasping of the “digital dividend”. The government should spend more on digital infrastructure, digital industrialization, digital economic activities, and digital innovation potential since the digital economy continues to support the attainment of common prosperity in cities. The government ought to aggressively enforce the consequences of the digital economy and encourage the improvement in the general standard of living in the Yellow River Basin.

• (2) Policies should be appropriately “tilted” to eliminate the digital divide. Based on the development disparities between the digital economy and common prosperity in different sections of the Yellow River Basin, a moderate policy tilt should be there toward cities in the middle and upper reaches of the Yellow River Basin. This is aimed at narrowing the digital divide among cities in the Yellow River Basin, reducing the disparity in common prosperity levels between cities in the upper, middle, and lower reaches, and promoting the overall achievement of common prosperity across cities in the Yellow River Basin.

• (3) Steps should be taken to improve economic relevance and achieve “harmony with neighbors”. In light of the direct and spillover effects of the digital economy on common prosperity in the Yellow River Basin, it is crucial to maintain close intercity connections within the basin and establish unimpeded channels for the two-way free flow of resource elements. Based on active promotion of the realization of a new normal of economic development in the Yellow River Basin; the idea of common prosperity for the cities in the Yellow River Basin should be encouraged; and the function of the “neighborly” impact should be consistently strengthened.

• (4) Regional development models should be improved and features such as “adaptation to local condition” and “act according to circumstances” should be achieved. Through a comprehensive analysis of the regional heterogeneity in the impact of the digital economy on common prosperity in the Yellow River Basin, the most suitable development model can be identified, which should be continuously improved over time. This initiative aims to infuse fresh energy into the digital economy within the Yellow River Basin and offer a fresh approach toward achieving common prosperity for the entire region.