Do green policies enhance short-term economic growth? Assessing EU Recovery and Resilience Plans through the lens of Sustainable Development Goals

Abstract

This paper examines the Recovery and Resilience Plans (RRPs) of the EU member states, focusing on their alignment with the environmental and socioeconomic dimensions of the UN Sustainable Development Goals (SDGs). In the absence of numerical data, we develop a novel textual indicator that classifies countries’ preferences in RRPs between environmental and socioeconomic SDGs. Using this indicator, we explore the factors associated with these preferences and their implications for expected short-term economic growth. Our findings show that green gap and touristic attractiveness shape countries’ green policy priorities. Furthermore, we find that a stronger focus on environmental SDGs is positively associated with higher expected GDP growth in the short term, suggesting that investments and reforms aimed at environmental sustainability may also drive short-term economic gains. These results provide empirical support for green policies and may help mitigate skepticism from certain political and public sectors.