Evaluating the Impact of the National Innovative City Pilot Policy on Green Total Factor Productivity: Evidence From China

ABSTRACT Green total factor productivity (GTFP) has been used to assess the degree of economic growth and environmental protection. Therefore this study treats GTFP and China's national innovative city pilot policy (NICPP) as research objects, using panel data from 270 prefecture‐level cities between 2007 and 2022. The empirical results demonstrate that NICPP significantly promotes GTFP, with the effect being more pronounced in cities characterised by strong market potential, favourable locational conditions, sound business credit environments, and weaker foundations in traditional industry. Mechanism analysis in a further step reveals that the policy primarily affects GTFP through four channels: promoting digital financial inclusion, increasing government attention to digital technologies, optimising urban functional division, and optimising R&D capital allocation efficiency. These outcomes offer empirical evidence and valuable options for the enhancement of GTFP.