Strengthening Institutions for a Green and Digital Future: Regional Evidence from Europe's Twin Transition

This paper explores the role of institutional quality in fostering the twin transition across European regions. We construct a novel panel dataset at the NUTS2 level (2006–2020), combining patent data from the OECD REGPAT with the European Quality of Government Index. Twin transition innovation is measured through the fractional count of patents in technologies simultaneously addressing environmental sustainability and digital transformation. Institutional quality is captured both through EQI and its key dimensions. Using a Tobit regression model with panel data, we find that higher institutional quality significantly increases the likelihood and intensity of twin transition patenting.