The Analysis of Interconnections Between the Three Dimensions of Sustainable Development in Terms of the Economy Structure Transformations

ABSTRACT The paper aims to show the analysis of dependencies between the three pillars of Sustainable Development (SD) across the European Union (EU) in terms of economy transformation. The provision of simultaneous development in environmental, social and economic dimensions is the crucial task for economies nowadays. The study is based on data characterising the European Union countries from 2015 to 2022. Firstly, the level of sustainability achievement in each individual dimension is assessed. For environmental and social sustainability, the composite indicator measures are defined and calculated. Economic sustainability is assessed with the Gross Domestic Product per capita level. To detect the occurring connections between SD pillars, the spatial Vector Autoregressive (spVAR) model is estimated and verified. The main results show that there is still a negative link between environmental and economic development. Moreover, the supporting role of the progressing servitisation process in sustainability achievement in the environmental and economic dimensions is concluded. Inversely, the industrialisation harms the ecological conditions in the EU. The findings obtained are important for the development of the green transformation and cohesion policy of the EU.