Emanuela Marrocu (p), Raffaele Paci, Luca Serafini (p)

Roberto Dellisanti

The European Union (EU) faces the dual challenges of achieving climate neutrality and digital transformation, embodied in the European Green Deal and the Twin Transition (TT) strategy. These initiatives aim to foster sustainability and global competitiveness while advancing economic and technological innovation. The Smart Specialisation Strategy (S3), the EU’s regional innovation framework, has evolved to reflect TT priorities, integrating environmental sustainability and digital advancement. This evolution, termed “S4,” emphaxizes the role of tailored regional strategies in aligning with broader EU goals.
This paper examines how European regions incorporated TT priorities into their S3 strategies during the 2014–2020 programming period, offering a twofold contribution. First, it documents significant regional heterogeneity in the integration of green and digital policies, highlighting the influence of local institutional capacities and economic conditions on the priority selection process. Second, it evaluates the relationship between these priorities and regional labor productivity growth.
The main findings indicate that digital, green, and twin projects are positively and significantly associated with productivity growth in low-productivity regions, highlighting their potential to address structural disadvantages. Moreover, we find evidence of U-shaped effects: middle-income regions experience weaker productivity impacts due to structural barriers and implementation inefficiencies, while high-productivity regions derive limited benefits, potentially due to diminishing returns. These results highlight the middle-income development trap and the complexity of TT implementation, where synergies and trade-offs vary across contexts.
This study enriches the literature on regional innovation and sustainability, emphasizing the need for place-sensitive regional policies to promote sustainable and inclusive economic growth. By examining the differential impacts of digital and green strategies, it contributes to discussions on how the twin transition can reduce disparities and enhance resilience in Europe.

Roberta Capello, Andrea Caragliu, Roberto Dellisanti (p)

Alberto Tidu

Regional disparities in Europe remain a persistent challenge, as economic and social imbalances endure despite decades of policy intervention. The divide between wealthier and less developed regions continues to shape economic stability, labour mobility, and political cohesion. Today, geopolitical tensions have become a critical factor in regional development, as global economic shifts, security concerns, and evolving alliances influence trade, industry, and investment. These external pressures, combined with internal divisions within Europe, increase the risk of economic fragmentation, potentially exacerbating inequalities between core and peripheral regions.
This paper explores two alternative scenarios for the future of European regional disparities, depending on the resolution of current geopolitical tensions. In a Cohesive EU in an Integrated World, the end of geopolitical conflicts restores global economic integration, strengthening EU unity and positioning the bloc as a more cohesive and influential player on the world stage. Conversely, in a Nationalistic EU in a Bipolar World, the resolution of these conflicts leads to a reassessment of globalisation, resulting in a bipolar geopolitical order where democratic and autocratic blocs compete. Under these pressures, the EU becomes more fragmented, with national interests taking precedence over collective action.
Using the MASST model, we simulate GDP growth at the NUTS2 level for all EU member states and the UK under these two scenarios. Our findings indicate that resolving geopolitical tensions leads to overall economic expansion compared to a reference scenario. However, the impact on regional inequalities is complex. In the Cohesive EU scenario, disparities between countries are lower compared to the Nationalistic EU, as lagging economies—particularly in Eastern Europe—converge with more advanced regions. Within countries, however, inequalities persist, as economic gains remain concentrated in core regions benefiting from agglomeration economies. While European cohesion reduces gaps among countries, they do not necessarily address intra-national disparities, highlighting the intricate dynamics of regional economic development.

Alberto Tidu (p), Stefano Usai

Emanuela Marrocu

During the last half a century, open economies have become more and more prevalent, with even partial
forms of autarky disappearing from almost every corner of the globe. Nonetheless, the socio-economic
implications of trade are still far from being fully identified. A major problem with the otherwise conspicuous
literature that has been produced so far is that the geographical unit of analysis has traditionally been the
country. The main reason behind this limitation is that - until recently – data on the exchange of goods and services
at the regional level was very scarce. As a consequence, it was not easy to confirm whether those associations that are usually assessed at the
national level also hold at the regional level. Regions belonging to the same country often exhibit very
different trade patterns and are characterised by very different social and economic indicators. The availability
of a comprehensive dataset allows us to explore the association of trade levels in 2017 with changes in gross
domestic product per capita, wages and unemployment rate in EU Nuts-2 regions in the following years. This
is fundamental to understanding the actual implications of trade as it concerns not only economic growth,
but also the distribution of its effects and the spatial and social inequalities that it might generate.