Institutional Quality in Green and Digital Transition of EU Regions – A Recovery and Resilience Analysis

Abstract

This paper assesses the National Recovery and Resilience Plans (NRRPs) of EU member states and regions to uncover commonalities and differences between green and digital transitions, focusing on the role of institutions, among additional socio-economic drivers, in modeling them. To that end, relevant indicators have been assembled, and several econometric models have been developed and tested to evaluate institutional performance in relation to green and digital transformations. The study reveals discrepancies in the two explored transition fields and highlights the power of institutional factors in boosting them. Specifically, the findings demonstrate that the green transition in EU regions is positively associated with variables such as life expectancy, institutional quality, tertiary education attainment, and small and medium enterprises (SMEs) with innovative activities, while the fruits of digitalization are mainly allied to population with higher studies, core creative class employment, accountability of institutions, and innovative SMEs. These insights offer valuable guidance for decision-makers to draw lessons from high-performing or successful regions and strategically assign resources. This includes paying attention to regional financial allocations and their alignment with territorial planning and long-term policies.