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Digital economy, green innovation and high-quality economic development

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  • Chen, Zhiang
  • Xing, Ruikun

Abstract

The rapid advancement of the digital economy has reshaped economic structures worldwide, yet its role in fostering high-quality economic development remains insufficiently explored. Existing research has largely overlooked the intricate mechanisms through which digital transformation contributes to sustainable economic progress, particularly the role of green innovation as a mediating factor. Addressing this gap, this study investigates how digitalization influences high-quality development by leveraging a dataset encompassing 279 Chinese prefecture-level cities from 2010 to 2022. Employing instrumental variable estimation, propensity score matching, and Heckman selection models, the findings confirm that digital economy development significantly enhances high-quality economic growth, both directly and through its stimulation of green innovation. The analysis distinguishes between substantial and strategic green innovation, revealing that substantial green innovations, characterized by breakthrough environmental technologies, exhibit a stronger mediating effect compared to incremental strategic innovations. Furthermore, heterogeneity analysis underscores regional and urban-rural disparities in digital transformation's impact, with core cities and the eastern region reaping the most benefits. These findings emphasize the need for tailored policy interventions that enhance digital infrastructure, foster innovation ecosystems, and address structural constraints limiting the equitable diffusion of digital advancements. The study provides new insights into the intersection of digitalization, sustainability, and economic quality, offering a foundation for policy strategies aimed at inclusive and environmentally sustainable development.

Suggested Citation

  • Chen, Zhiang & Xing, Ruikun, 2025. "Digital economy, green innovation and high-quality economic development," International Review of Economics & Finance, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025001923
    DOI: 10.1016/j.iref.2025.104029
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    Cited by:

    1. Zhuo Huang & Lin Tang & Xiang Chen & Jian Han, 2025. "Can the Digital Economy Really Narrow the Innovation Efficiency Gap Among Cities in China?—A Study from the Perspective of Triple Networks," Sustainability, MDPI, vol. 17(9), pages 1-32, April.
    2. Yanhua Li & Tingyu Zhang, 2025. "How Does the Digital Ecosystem Foster New Quality Productive Forces? A Dynamic QCA of Sustainable Development Pathways in China," Sustainability, MDPI, vol. 17(11), pages 1-24, May.

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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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