Digital Cooperation, Uneven Upgrading and the Governance Dilemma: Evidence from China–Thailand Cross-Border Digital Economy Collaboration

This study examines the potential public-policy implications of the China–Thailand Digital Economy Cooperation Agreement for the upgrading of Chinese firms. Using firm-level data and a difference-in-differences approach, upgrading is measured through digital transformation, green transition and productivity. The DID estimates indicate that digital cooperation is associated with higher upgrading on average, but the gains are uneven across firms. Firms with stronger initial digital capabilities benefit more, consistent with capability-related disparities in the returns to digital cooperation. State-owned enterprises experience larger effects than private firms, which may have implications for competitive neutrality.while carbon-intensive industries respond more strongly, consistent with concerns about potential cross-border carbon leakage. Firms with a higher pre-policy high-skill share also gain more, consistent with skill-complementary upgrading and potential distributional implications. These findings highlight a potential governance trade-off: digital cooperation can accelerate upgrading, while uneven gains across firms and industries suggest possible distributional and environmental concerns, underscoring the importance of complementary policies on digital inclusion, access to infrastructure, and cross-border environmental governance.