Does the digital economy enhance common prosperity? Examining the mediating influence of resilience in environmental investment

Background: The link between the digital economy and prosperity is well established. However, the mechanism underlying the relationship between the digital economy and common prosperity is yet to be investigated. Study rationale and purpose: The main purpose of this study is to address this mechanism by examining the extent to which the digital economy has optimized regional investments in protecting the environment, particularly the resilience of environmental investment, thus influencing common prosperity. We draw upon insights from the fault tolerance and social inclusion theories to develop a model that illuminates how the digital economy enhances common prosperity through the resilience of environmental investment. Methods: We used econometric, gray predictive modeling methods for data analysis. We propose environmental investment resilience, including flexibility and stability, as a mediating mechanism through which the digital economy can improve common prosperity. This study selected Chinese cities in 2010-2021 as a sample for the experiment and employed a difference-indifferences model to examine whether the digital economy enhances regional common prosperity. Principal findings: The results show that the digital economy improves common prosperity through the resilience of environmental investment. Specifically, the digital economy enhances the flexibility and stability that are two indicators of resilience in environmental investments, which in turn enhances the level of common prosperity. Moreover, the relationship between environmental investment resilience and common prosperity is strengthened by inaugurating a high-speed rail. In addition, this relationship is weakened in an aging population. Finally, we focused on environmental investment efficiency using a gray prediction model. The results show that environmental investment efficiency generally shows an upward trend in fluctuation, which proves the robustness of our results.