Trickle-down or siphon: The spillover effects of the digital economy on green innovation from the perspective of the circular economy

In addition to the transformations driven by digitalization and sustainability, the digital economy has opened new paths and revitalized the advancement of green innovation. As a key driving force of the circular economy system, green innovation can effectively promote sustainable development and high-quality economic growth. This study employs a panel dataset encompassing 108 cities at and above the prefectural-level within the Yangtze River Economic Belt from 2011–2021 to investigate the spillover impacts and transmission mechanisms of the digital economy on green innovation through the Spatial Durbin Model through empirical observations. The findings reveal an uneven distribution of the digital economy and green innovation within the Yangtze River Economic Belt, with the downstream area exhibiting more significant levels than the middle and upper sections. While the digital economy enhances green innovation in local cities, it also has a trickle-down effect on neighboring cities, which remains robust through various tests. The spillover effects of the digital economy on green innovation are pronounced in downstream regions, which are cities with high concentrations of human capital and green innovation. Mechanistic testing shows that the digital economy advances local green innovation levels by facilitating the flow of R&D staff, R&D capital, and industrial structure upgrading. The positive transmission effect in neighboring areas is driven primarily by the movement of R&D staff. This study offers valuable empirical insights for guiding green transformation efforts and promoting coordinated regional development.