Systemic Interactions Among Digital Transformation, Sustainable Orientation, and Economic Outcomes in EU Countries

Digital transformation and sustainable orientation have become key drivers of economic development within the European Union. This study investigates how progress in digitalization and sustainable orientation influences economic outcomes. To address this objective, we apply a combination of techniques, including factor analysis to reduce dimensionality and identify underlying structures, generalized linear models to estimate causal connections and cluster analysis to group countries with similar profiles. The findings highlight strong complementarities between digital transformation and sustainable development in nurturing higher levels of economic outcome, with digital readiness amplifying the effects of sustainable development practices. Moreover, cluster analysis methods reveal significant asymmetries among EU countries, underlining persistent regional disparities in the pace of digital and sustainable transitions. The study concludes that a systems-based approach to managing the twin transition is essential for promoting convergence, competitiveness, and resilience in the EU economic system.