Synergies in Sustainability: Assessing the Innovation Effects of Digital and Green Investments in EU Cohesion Policy

The European Union’s Cohesion Policy is a key instrument designed to reduce disparities among regions and promote sustainable, inclusive growth across Europe. In the context of the green and digital transitions, understanding how Cohesion Policy funds affect innovation is crucial to effective policy design. This study examines the impact of these funds on firm-level innovation in three domains: digital, green, and combined digital–green innovation. Using firm-level data and econometric models, our analysis uncovers a strong and statistically significant positive effect of Cohesion Policy funding on digital innovation. The impact on green innovation alone is positive but weaker and only marginally significant. Innovations that are both digital and green benefit from Cohesion Policy significantly, highlighting the potential of integrated innovation strategies.