DIGITAL TRANSFORMATION, ECONOMIC PERFORMANCE, AND SUSTAINABILITY WITHIN THE EU

By using triple time segmentation and dual model specifications, this paper investigates the relationship between digital transformation, economic performance, and sustainability within the European Union. By employing a multi-stage methodology (PCA, cluster analysis, and fixed effects (FE) panel regression modeling) across 27 EU countries, the study confirms the complex interdependence among these three dimensions. Findings identify four heterogeneous clusters, highlighting a contradiction between digital - economic leaders and sustainability leaders, indicating a significant challenge in decoupling growth from sustainability impacts. The panel regression results confirm digitalization as a robust and statistically significant driver of economic growth. Most importantly, the positive impact of renewable energy sources on economic performance confirms their endogenous benefits.