Abstract: The digital economy has become a key force driving the improvement of production efficiency, but the unbalanced development trend of the digital economy may exacerbate the production efficiency gap between regions. The regional coordinated development and common prosperity in the era of digital economy are faced with new problems and new challenges. Based on the panel data of prefecture-level cities in China from 2011 to 2019, this paper conducts an empirical study of the relationship between the development of digital economy and the total factor productivity and the regional heterogeneity. The findings show that digital economy has a significant productivity growth effect, which is mainly reflected in pure technological progress. The digital economy has failed to empower the growth of total factor productivity through the improvements in technical efficiency and scale efficiency. The mechanism analysis reveals that digital economy mainly promotes the growth of total factor productivity through the innovation-driven effect, the entrepreneurial incentive effect, the industrial upgrading effect and other channels, but the impacting effect is only significant in the eastern region. The results of the regional heterogeneity show that the higher the productivity efficiency and economic development level of the city, the more obvious the productivity growth effect of the digital economy, which leads to the“productivity gap”between regions. The results of the threshold effect test reveal that the increasing marginal effect of digital economy and the relative insufficiency of the less developed cities in talent agglomeration, financial development and fixed investment has strengthened the“productivity gap”between regions.

Key words: digital economy, total factor productivity, innovation and entrepreneurship, industrial upgrading, regional coordination