Abstract:Cities in underdeveloped areas are seeking a series of measures to stimulate the dividend effect of digital economy on economic growth. To explore the empowering role and impact mechanism of the development of digital economy on the high-quality development of urban economy in underdeveloped areas. Based on the connotation of digital economy and high-quality economic development, a city level indicator system for digital economy and high-quality economic development is constructed. Based on the entropy method to calculate relevant indices, a two-way fixed effects model is used to analyze panel data of 14 cities in Guangxi from 2012 to 2021. At the same time, an individual and time two-way fixed effects model is used to test the mediating effect of technological innovation factors. The empirical results indicate that the level of digital economy and high-quality economic development in underdeveloped areas is steadily increasing, but there are problems of imbalanced and insufficient development; The digital economy has significantly promoted the high-quality development of urban economy in underdeveloped areas. The level of government intervention, industrial structure, higher education level, and urbanization rate can effectively promote the high-quality development of urban economy in underdeveloped areas; Technological innovation plays an important intermediary role in promoting high-quality economic development in underdeveloped urban areas through the digital economy. Based on the conclusion, propose differentiated digital development strategies, promote the digital transformation and upgrading of traditional industries, and other policy recommendations to promote the high-quality development of urban economy in underdeveloped areas.