Driving sustainable competitiveness: the synergy of digitalization and eco-innovation in the EU

In the face of global environmental and economic challenges, the role of digitalization and eco-innovation in driving sustainable competitiveness remains underexplored, particularly in the context of EU countries. This study aims to examine how digitalization and eco-innovation contributed to enhancing sustainable competitiveness among 27 EU countries from 2017 to 2022. Using an unbalanced panel data analysis, we employed the Prais‒Winsten regression model with panel-corrected standard error (PCSE) to assess the effects of eco-innovation, digital integration, human capital, economic freedom, and internet usage on sustainable competitiveness. The results indicate that eco-innovation and economic freedom significantly enhance sustainable competitiveness, whereas population growth negatively impacts it. Human capital in the digital sector also plays a critical role, emphasizing the importance of developing digital skills to support sustainable competitiveness. The findings suggest that policies promoting eco-innovation and digital skill development are crucial for improving sustainable competitiveness. Future research should explore these dynamics longitudinally and across diverse economies to deepen the understanding of digital and environmental transformations.