The impact of the digital economy on green innovation: the moderating role of fiscal decentralization

The digital economy represents a new economic form that exhibits a heavy reliance on data resources, and it has the potential to extensively affect green innovation. In this paper, the theoretical mechanism through which the digital economy affects green innovation is dissected and panel data from 278 Chinese cities covering the period of 2011 to 2019 are collected to empirically test both the quantitative and qualitative dimensions of the impact of the digital economy on green innovation. The results show the following: (1) The digital economy exerts a dual impact by both increasing quantity and improving quality in green innovation. (2) By eliminating financial restrictions, encouraging industrial collaborative agglomeration, and raising governmental environmental concerns, the digital economy exerts an influence on green innovation. (3) The relationship between the digital economy and green innovation is significantly negatively mediated by fiscal decentralization. (4) The digital economy hinders the growth of green innovation by exerting a negative spatial spillover effect on surrounding areas. (5) The digital economy has a more positive impact on green innovation in eastern cities, large cities, cities with high administrative hierarchy, and cities with strong intellectual property rights protection. Based on the conclusions of this study, we propose that the government should continue to promote the development of the digital economy in the future to fully release the innovation dividend of the digital economy, accelerate the construction of a scientific performance appraisal system to overcome government failure in the process of green innovation, and consider the differences in the development of regions to form a new pattern of synergistic green innovation between regions. In this paper, to understand how the digital economy promotes green innovation, we not only provide theoretical and empirical evidence at the city level but also provide references and insights with which governments can improve their green innovation incentive policies and optimize the design of fiscal decentralization systems for the promotion of green innovation.