Abstract:    Whether digital-real integration can correct factor misallocation and thereby comprehensively promote economic and social high-quality development is a vital issue that needs to be addressed in the digital age. This paper used the provincial panel data from China between 2011 and 2022 and employed a two-way fixed effects model to study the impact of digital-real integration on high-quality development and its underlying mechanisms. The study found that: (1) Digital-real integration significantly promotes high-quality development, having positive effects on innovative development, coordinated development, green development, open development, and shared development, while the impact shows certain regional heterogeneity. (2) In regions with a higher level of factors, digital-real integration has a more significant promoting effect on high-quality development. (3) For underlying mechanism, digital-real integration promotes high-quality development by reducing misallocation of capital factors and labour factors, through which reducing factor misallocation and thereby enhancing total factor productivity is a significant path. The conclusions will provide a new theoretical perspective and empirical evidence for deepening the understanding of digital-real integration, improving factor misallocation, optimizing factor input, and thereby effectively enhancing total factor productivity and releasing the potential of digital-real integration. It also will have implications for accelerating the practice of digital-real integration to promote high-quality development.

Key words: digital-real integration, high-quality development, factor misallocation, factor level, total factor productivity