From Innovation to Sustainable Competitiveness: Enhancing the Role of Education and the Green-Digital Transition in Central and Eastern Europe

Abstract

Technological innovation and digital transformation are increasingly viewed as key drivers of competitiveness and environmental transformation in Central and Eastern Europe (CEE). Yet the extent to which innovation-driven performance also translates into broader sustainability improvements remains insufficiently understood. The current study focuses on determining the link between innovation capabilities, education system, digitization, and sustainable performance for CEE countries in the time frame of 2017 to 2024. Panel data were collected from a multivariate panel dataset created from the European Innovation Scoreboard, with sustainable performance evaluated by the environmental sustainability index, technology for the environment, and PM2.5 emissions. To guarantee the reliability of the results, several approaches for estimating the relationships between variables were used, such as random effects panel regression, pooled OLS estimation with Driscoll-Kraay and panel-corrected standard errors, and robust regression with Huber and biweight iterations. In addition, structural equation modeling (SEM) is employed to identify latent interdependencies among innovation, digitalization, education, and sustainability indicators. The results indicate that stronger innovation capacity and digitalization are associated with improvements in sustainability outcomes of CEE countries, with education playing a decisive role in enhancing this performance. Environmental improvements are even more noticeable in countries that have higher degrees of green and digital innovations. The present research makes a valuable contribution to existing literature in the field, as it presents a comprehensive examination of the innovation greening-digitalization relationship in CEE countries by using an eclectic approach of multiple econometric and SEM analysis techniques.