GREEN TRANSFORMATION OF THE EUROPEAN UNION: IMPLICATIONS ON THE ECONOMIC DEVELOPMENT OF THE WESTERN BALKANS

Abstract

Regardless of the geopolitical and economic challenges the world as well as the European Union (EU) face, it appears that these issues have not, in the slightest, affected the EU's commitment to the green transition. The European Commission continues to provide strong support to member countries in implementing reforms that encourage the green transition. In conditions of sluggish economic growth, the investments in the green transition are characterized as a significant driver of economic growth. This paper analyzes and evaluates the implications of the EU's green transformation on the economic development of the Western Balkans (WB), with a special focus on the Green Deal and climate neutrality. The Green Deal represents the EU's key strategy for achieving climate goals and transitioning to a sustainable, green economy. Through an analytical approach, the impacts of the green transformation and related policies on the economic, social, and environmental aspects of the region are explored, considering the global Green Economy Index. The research methodology includes cluster analysis and analysis of the green economy index to assess the correlation between factors of the green economy and economic development, considering financial, institutional, and legal aspects of the Green Deal. Additionally, a comparison of development according to the Green Economy Index is applied to identify the position, potential, but also limitations of the Western Balkans in this context. Key indicators of the green economy, such as investments in renewable energy sources, energy efficiency, and sustainable infrastructure, are analyzed in terms of their impact on macroeconomic indicators such as gross domestic product per capita, unemployment, etc., in the Western Balkans. The paper identifies a range of opportunities for economic development, including increasing investments in renewable energy sources and developing sustainable infrastructure projects, but at the same time recognizes limitations, such as a lack of capacity, financial resources and public sector support to implement sustainable policies. Furthermore, there is a risk of increasing economic and social inequalities in the process of green transformation, as well as potential negative environmental consequences if appropriate measures are not taken.