Abstract:      "Mass Entrepreneurship and Innovation" is an important strategy for accelerating the construction of an innovative country, promoting regional innovation and entrepreneurship through the digital economy is a powerful tool for in-depth implementation of the innovation-driven development strategy. At present, China′s economy is in a critical period of transition from a high-speed growth stage to a high-quality development stage. The wide application of digital technologies such as big data, cloud computing, and artificial intelligence has gradually pushed the society into the era of digital economy, which has become a "new engine" for economic growth and occupies an important position in the national development strategy. The vigorous rise of the digital economy has brought new opportunities to enhance urban innovation and entrepreneurship capabilities, making innovation and entrepreneurship activities that rely on digital technology media to reflect unprecedented openness, borderlessness and strong interaction. It provides support for the comprehensive implementation and in-depth promotion of China′s "Mass Entrepreneurship and Innovation" strategy. However, there is no systematic research about the impact of the digital economy on the innovation and entrepreneurship. Then, can the development of the digital economy effectively promote regional innovation and entrepreneurship in China? What is the internal mechanism? And will there be differentiated impacts due to the differences in regional distribution, city level and other factors? The answer to these questions will be the focus of the following research in this paper. Based on the panel data of 281 prefecture-level cities in China from 2005 to 2019, this paper systematically examines the impact of the digital economy on regional innovation and entrepreneurship. The research found that: (1) The digital economy plays a significant role in promoting regional innovation and entrepreneurial in China. This promotion is still established after a series of endogenous tests and robustness tests, which affirms the positive impact of the digital economy on innovation and entrepreneurship and provides support for the in-depth implementation of innovation and entrepreneurship in China from the development of digital economy, which will lay a solid foundation for accelerating China rise to the forefront of the world′s innovative countries; (2) The mechanism test shows that the digital economy promotes regional innovation and entrepreneurship by reducing transaction costs, thereby smoothing the flow of factors, suppressing resource mismatches, and promoting regional innovation and entrepreneurship. It provides a new explanation from the aspect of transaction cost of the digital economy to promote innovation and entrepreneurship in the perspective of institutional economics; (3) This paper examines the different influences of digital economy on the regional innovation and entrepreneurship in China from three aspects: regional heterogeneity, city-level heterogeneity and innovation and entrepreneurship intensity heterogeneity. And the heterogeneity test shows that the digital economy has a stronger effect on promoting the innovation and entrepreneurship activities in southern cities, general-level cities and lower-level innovation and entrepreneurship cities. It is necessary to attach great importance to the further differentiation of the development of the digital economy on the innovation and entrepreneurship between northern and southern cities.Based on the new development stage and new development pattern, in the face of the complex and severe international and domestic economic situation, in order to further build China into a strong country both in the digital economy and innovation and entrepreneurship, and create a "new benchmark" for driving regional innovation and entrepreneurship with the digital economy, combining with the above research conclusions of this paper, some policy implications are put forward as follows: First, vigorously promote the development of the digital economy, release the positive driving effect of the digital economy on regional innovation and entrepreneurship, and provide strategic support to enter the forefront of the world′s innovative countries at an early date. Second, strengthen the effect of the digital economy in reducing transaction costs, accelerate the free flow of information and other resources, optimize the allocation of innovation and entrepreneurship resources, and continuously enhance regional innovation and entrepreneurship capabilities. Finally, attach great importance to the development gap between the north and the south of the digital economy, strengthen the positive role of the digital economy in promoting the balanced development of innovation and entrepreneurship, and effectively ensure the comprehensive, sufficient, and balanced driving role of the digital economy in regional innovation and entrepreneurship in China.

Key words: digital economy, innovation and entrepreneurship, transaction cost, north-south gap