China’s government plays a crucial role in harnessing the digital economy’s positive impact on carbon total factor productivity (CTFP). Addressing endogeneity, this study employs an endogenous stochastic frontier analysis to measure CTFP and the digital economy’s effects concurrently. It consistently finds a beneficial influence of digital technologies on CTFP, driven by advancements in digital production methods and strengthened urban environmental governance.
This impact is notably pronounced in regions with high environmental awareness, limited digital resource abundance, and elevated human capital. The study underscores the importance of China’s government policies that promote digital adoption in production, enhance digital environmental regulations, and invest in digital human capital, thereby facilitating sustainable and balanced regional development.
