Smart and green. The uneven effects of the twin transition in European regions

The European Union’s strategic emphasis on climate neutrality and digital leadership, embodied in the European Green Deal and the Digital Compass, has placed the twin transition (TT) at the forefront of regional development policy. The growing integration of environmental sustainability and technological transformation into Smart Specialisation Strategies (S3) reflects increasing expectations that European regions align their innovation agendas with green and digital priorities. Despite this policy momentum, empirical evidence remains limited on how regions incorporated green and digital strategic orientations into their S3 strategies and how these orientations are associated with regional economic performance. This paper contributes to filling this gap by examining the green, digital, and twin orientation embedded in European regions’ 2014–2020 S3 strategies. Within a regional growth and convergence framework, we analyse how these policy orientations are associated with labour productivity growth while controlling for initial economic, institutional, and structural conditions. Our results reveal substantial heterogeneity across regions. Digital and twin strategic orientations are positively associated with productivity growth in less developed regions, whereas the associations become weaker or negative in regions at intermediate stages of development and generally insignificant in the most advanced regions. Overall, the findings indicate that the relationship between S3 strategic orientation and regional productivity varies systematically with initial regional conditions. The paper contributes to the emerging literature on the TT by highlighting the importance of place-sensitive policy approaches in the evolution towards Sustainable Smart Specialisation strategies.