The significance of innovation similarity in the relationship between economy structure changes and economic sustainability in Europe – a spatio-temporal approach

The aim of this paper is to assess the significance of the innovation level of countries for achieving economic sustainability in European countries, considering the context of economic structure transformations. The study focuses on 40 selected European countries from 2014 to 2021. Economic sustainability is a crucial issue for governments nowadays and depends on various factors, including ongoing changes in countries' economic structure. The investigation examines the impact of the expansion of the agricultural and services sectors on the economic pillar of Sustainable Development using a spatio-temporal sensitivity model. The level of economic sustainability, as a multidimensional phenomenon, is calculated using a composite indicator. Another determinant of economic development is the level of innovation. The research compares the significance of knowledge diffusion and geographical proximity in achieving economic sustainability. Physical proximity and innovation similarity are included in the analysis as spatial weight matrices necessary for estimating spatial models. ....