DIGITAL TRADE POLICY AND URBAN INNOVATION CAPACITY: EVIDENCE FROM 280 CHINESE CITIES

With the evolution of the digital economy, digital trade policies have increasingly demonstrated significant effects on enhancing urban innovation capacity. This study combines policy qualitative analysis with quantitative research methodologies, utilizing the establishment of Cross-border E-commerce (CBEC) Comprehensive Pilot Areas as a quasi-natural experiment, based on data from 280 prefecture-level cities in China from 2010 to 2021, to examine the impact of digital trade policies on urban innovation capacity and its underlying mechanisms. The findings indicate that the establishment of CBEC pilot areas significantly enhanced urban innovation capacity, with particularly pronounced effects in China's eastern developed regions, tertiary industry-dominated cities, and megacities. Mechanism analysis reveals that establishing CBEC pilot areas enhances urban innovation capacity by improving digital infrastructure, facilitating service industry agglomeration, and optimizing the business environment.