Demystifying digital economic performance in China: A local officials’ career incentive perspective

Digital economy has witnessed phenomenal rise globally in recent years. Drawing on the political tournament theory, this paper investigates whether local officials’ career incentive act as an intrinsic impetus for China’s thriving digital economy. Leveraging a unique provincial-level dataset of digital economy in China spanning 2007-2017, we uncover an unexplored relationship between digital economic growth and local leaders’ career incentive. The results demonstrate that first there is a significant inverted U-shaped relationship between the tenure of the provincial leader and the scale of digital economy and digital infrastructure; second, there is a robust age effect and a party leadership effect on local digitalization, underlining the stronger career incentive due to higher evaluation pressure on local officials. Overall, this paper not only adds new nuances to the political tournament theory but also holds practical significances on approaches to fostering digital economy worldwide.