Factor-driven or innovation-driven? The role of digital technology in the cleanliness of industrial structure

The role of digital technology in structural change of three major industries has been widely recognized, but its influence on the internal cleanliness change of the industry has not been confirmed. Based on panel data of 36 industrial sub -sectors in China from 2002 to 2020, this paper discusses the mechanism of digital technology driving the cleanliness of industrial structure from a heterogeneity perspective. The theoretical model indicates that variations in output growth across different industries can be attributed to total factor productivity (TFP) and factor distortions, and the heterogeneous contribution of digital technology to TFP and factor distortions leads to the change of industrial structure. The empirical results show that digital technology can not only promote innovation -driven development by increasing total factor productivity, but also help factor -driven development by reducing factor distortion. Heterogeneity tests show that digital technology contributes to the cleanliness of industrial structure, and polluting industries are mainly driven by factors, while cleaning industries are mainly driven by innovation. Therefore, it is necessary to correct the application direction of digital technology in time to better empower innovative development and clean production.