Working Paper Identification of Sustainable Growth Regions Through Innovation on NUTS-3

This study investigates the role of innovation in shaping economic growth across the heterogeneous landscape of the European Union (EU). Through a detailed analysis at the NUTS-3 level, it identifies regions characterized by sustained and above-average growth, thereby providing new insights into the mechanisms through which innovation contributes to regional economic resilience and long-term prosperity. Our methodology employs panel data from the EU27 Member States and the United Kingdom (UK), spanning the period from 2002 to 2022, allowing a more comprehensive understanding of the determinants of regional growth, including Gross Value Added (GVA) across various industries, the unemployment rate, and inflation. Furthermore, the role of innovation as a pivotal force driving economic progress is underscored. The analysis reveals significant differentiation within the cluster, supporting the assumption that innovation plays a crucial role in driving robust and, most notably, sustainable economic growth in a region. The findings further highlight that regions with an industry structure closely resembling the sample average are significantly influenced by innovation. From this, it can be deduced that innovation is a key driver of sustainable growth, especially in regions with the necessary infrastructure, skilled labour, and industry diversification to effectively harness innovative activities.