Digital economy, green innovation and high-quality economic development

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.