Recently, the paper entitled Spatial Effects of the Digital Economy: A Trade Cost Perspective, with Professor Cai Hongbo from Beijing Normal University Business School (BNUBS) as the corresponding author, has been published in Issue 5, 2026 of Management World.

Amid the rapid development of the digital economy, digital technologies have shown great potential in optimizing supply chains and improving circulation efficiency. Existing studies have confirmed that the digital economy can reduce interregional trade costs by easing information barriers and weakening geographical constraints. However, insufficient attention has been paid to its spatial redistribution effects and the resulting changes in regional economic patterns. The spatial effects of the digital economy may feature significant regional heterogeneity and nonlinear characteristics, which urgently need to be revealed with more precise research methods.

This paper introduces the digital economy into the model as a key determinant of trade costs, allowing shocks from the digital economy to transmit across regions and industries through industrial linkages. Based on the established theoretical model, a series of counterfactual analyses are conducted to quantify the impacts of the digital economy on key economic variables such as national GDP and regional output.

The main conclusions are as follows: First, regional digital economic growth significantly boosts local GDP, while spatial spillovers present a complex pattern of both siphoning and diffusion effects. This heterogeneity stems from the differentiated roles of the digital economy through three channels: productivity, labor reallocation, and terms of trade. Second, the digital economy has fostered three distinct development paths: quality upgrading in the eastern region, scale expansion in the central region, and efficiency improvement in the western region. Third, the economic promotion effect of the digital economy exhibits notable nonlinearity. It requires a certain threshold to unlock growth potential, with growth accelerating as the digital economy develops, driven mainly by the terms-of-trade effect. Fourth, the production network contributes to more than half of the growth effect.

Compared with existing literature, the marginal contributions of this paper are: (1) It constructs a unified theoretical framework to systematically examine the spatial effects of the digital economy from the perspective of trade costs.(2) Through a triple decomposition of output growth effects, it finds that the nonlinear impact of the digital economy on regional economies is driven primarily by the terms-of-trade effect, rather than productivity or labor reallocation effects. (3) It estimates the elasticity of trade costs with respect to the digital economy and ensures result reliability through endogeneity tests and multi-dimensional robustness checks. These parameter estimates provide important evidence for understanding heterogeneous impacts across industries and regions and offer references for follow-up research.

(4) It further expands the research perspective and verifies the key role of the production network in transmitting the spatial effects of the digital economy.

Liu Lin, Cai Hongbo (Corresponding Author), Mao Jian. Spatial Effects of the Digital Economy: A Trade Cost Perspective. Management World, 2026(5). Available at: https://mp.weixin.qq.com/s/ePSqlWeL7kH09cWxH4VBKg

Author Profiles

Cai Hongbo

Director of the Finance Office, Associate Dean of the Academy of Belt & Road, and Professor & PhD Supervisor at BNUBS. His research focuses on international economics and the digital economy. He is a Distinguished Young Scholar under the Changjiang Scholars Program of the Ministry of Education, a visiting scholar at Stanford University, Chief Expert of a major project of the National Social Science Fund of China, and Chinese Chief Expert of the EU Horizon Programme. He has published more than 200 papers in top Chinese journals such as Economic Research and Management World, as well as ABS 4-star top English journals including Journal of World Business and British Journal of Management. He is an ESI Highly Cited Researcher in Economics and Business worldwide and has received multiple awards including the An Zijie International Trade Research Award.

Liu Lin

PhD graduate from BNUBS.

Mao Jian

PhD candidate at BNUBS.

Contributed by  Liu Lin

Edited by Sun Yue

Reviewed by Hu Conghui