Green Growth in the EU: Innovation, Investment, and the Path to Sustainability

Abstract

Purpose. The study examines interactions among economic growth, innovation, and environmental sustainability across the EU-27 countries from 2015 to 2022. It aims to evaluate advancement toward United Nations’ Sustainable Development Goals.
Design/Methodology/Approach. Using Eurostat data, the analysis employs Pearson correlation coefficients to explore relationships between key economic and environmental variables and applies cluster analysis to EU Member States based on their performance and sustainability profiles.
Findings. Pearson correlations show strong positive links between economic growth and greenhouse gas emissions (0.950 in 2015, declining to 0.945 in 2022), economic growth and energy consumption (0.990 to 0.981), and economic growth and investment in fixed assets (0.996-0.997). Gross domestic expenditure on research and development correlates negatively with emissions (0.909 to 0.886), while energy-greenhouse gas ties remain stable (0.976-0.979). Cluster analysis identified six heterogeneous groups, ranging from Germany's high research growth and emission reductions to EU Member States in sustainable energy transition to reduce fossil fuel and achieve energy independence.
Originality. The study provides integrated empirical analysis that combines post‑2015 Eurostat data, Pearson correlations, and Gaussian mixture model cluster analysis to systematically investigate interdependencies between GDP, greenhouse gas emissions, energy consumption, fixed capital formation, and research and development expenditure across all EU‑27 countries, thereby advancing Environmental Kuznets Curve and green innovation research through contemporary, country‑level evidence on emerging decoupling patterns and six distinct transition pathways that directly inform differentiated policy actions under the European Green Deal.
Practical implications. Policy recommendations include targeted research incentives and renewable energy transitions for underperforming states.

Keywords: green innovation, sustainable development goals (sdg), cluster analysis, environmental Kuznets curve, European Union, Pearson correlation

JEL CODES: Q01; Q55; Q56; C38; O52; O44