Effect of Digital Silk Road and innovation heterogeneity on digital economy growth across 29 countries: New evidence from PSM-DID

Digital Silk Road (DSR) initiated in 2015 aimed to foster industry collaboration within high-tech sectors. We compare different effects of the Digital Silk Road and innovation heterogeneity on digital economy growth between 9 treatment and 20 control countries via propensity score matching (PSM)-DID (difference-in-differences) methodology. The PSM-DID approach have the merits to address the differences biases between treatment and controlled groups, while embracing the complex dimensions of individual heterogeneity. Furthermore, we also explore the different effects of institutions innovation (INS), human capital and research innovation (HCR), infrastructure innovation (INF), market sophistication innovation (MAS), and business sophistication innovation (BUS) on the digital economy. Notably, the investigation also probes the interactions that transpire between human capital & research innovation and different innovation on the digital economy. The DID regression revealed that policy shock of DSR has exerted a discernibly positive effect on the digital economy. Infrastructure innovation improved digital economy. Human capital and research innovation also enhanced digital economy. Business sophistication innovation promotes the increase of the digital economy.