Economic Growth, Green Competitiveness and Institutional Quality in Post-2004 EU States: Panel ARDL-PMG Analysis

This paper investigates the determinants of economic growth in EU member states that joined the Union in 2004 and later, focusing on institutional quality, competitiveness, and the green transition. Three composite indices are constructed using principal component analysis (PCA) and incorporated into a panel ARDL-PMG model, complemented by robustness checks with fixed-effects and system-GMM estimators. The results highlight competitiveness as the most robust driver of growth across specifications, while institutional quality emerges as an enabling factor, particularly under dynamic specifications that account for endogeneity. The green transition shows significant long-run benefits, although its short-run effects are weaker, reflecting the gradual payoff of environmental investments. Policy implications emphasize the importance of strengthening institutional frameworks, fostering innovation and productivity, and sustaining commitments to the green transition as pillars of sustainable convergence. The findings enrich the literature on EU integration and provide evidence-based insights for aligning cohesion policy and the European Green Deal with growth objectives.