Dual pathways to innovation in the age of digitalization: How the digital silk road transforms quality and quantity of innovation in member countries and China

Nowadays, the digital economy serves as a major driver of socio-economic development and a key accelerator of innovation, particularly within the Digital Silk Road (DSR) initiative. Accordingly, this study investigates how digital trade through the Digital Silk Road (DSR) affects innovation quantity and quality, and also examines how digital industrialization and digital inclusion moderate this relationship. Using data from 2010 to 2023, an integrated empirical framework combining propensity score matching with multi period difference-in-differences (PSM-DiD) approach is applied to DSR member countries and the host country, China. The current research declares the following findings. First, the digital trade in DSR countries increases the quantity of innovation (patent applications) while the quality of innovation (knowledge and technology outputs index) is economically and statistically larger in magnitude. Second, digital inclusion and digital industrialization are key positive moderators. Third, the heterogeneity analysis stated that the quality of innovation is more pronounced in the non-Asian regions, high-level economic development countries, or high-marketization-level countries. In China, innovation quantity (patent authorizations, trademark ownership) has risen sharply, while innovation quality shows mixed effects: digital trade via DSR boosts new product revenue but negligibly impacts high-tech exports. This study advances the literature by jointly evaluating both innovation quantity and quality, and providing a systematic comparison between DSR member countries and China. Based on the results obtained, related policy recommendations emphasize that strengthening digital economy through improved digital infrastructure, regulatory frameworks, and innovation supporting mechanisms with emphasis on prioritizing innovation quality. Additionally, fostering public–private collaboration is crucial for efficient resource allocation and sustainable innovation outcomes.