Marketization as a Catalyst: Understanding the Impact of Digital Economies on Green Innovation in Mainland China

Abstract

Amid global environmental challenges, understanding how digital economies drive green innovation is critical, especially within China's market-based socialist framework. This study investigates how the digital economy and marketization jointly influence ecological innovation across 31 provinces in mainland China from 2011 to 2023. By integrating panel data analysis with a theoretical framework linking digital economic growth, marketization, and green innovation, this research uncovers key dynamics shaping sustainable development. Findings reveal that advancements in the digital economy significantly promote regional green innovations, with marketization serving as a vital conduit that amplifies this effect. Moreover, marketization exhibits dual impacts, both enhancing and moderating the sustainability outcomes driven by digital growth. These insights offer theoretical contributions by clarifying the causal mechanisms among digital economies, market forces, and innovation, while practically suggesting the need for a collaborative “enterprise-public-government” framework and robust market-driven innovation systems to foster green development.