The Conditional Impact of Recent Economic, Global, and Technological Challenges on Productivity Growth in EU Regions

ABSTRACT The global landscape is marked by ongoing transformations and abrupt shifts driven by new forms of globalisation through the expansion of Global Value Chains, the Fourth Industrial Revolution, and recurring crises. This paper examines the role of these key economic, global, and technological challenges in shaping productivity growth across EU regions, assessing both the nature and variability of their impacts at the sub‐national level. The novelty of the paper lies in its ability to uncover the complex dynamics and pronounced spatial variations often masked by national aggregates, many of which remain underexplored. The results show that productivity imbalances stem from economic challenges, where resilience depends on the adaptation and adaptability of regions anchored in the secondary sector; from global challenges, as integration imposes limits and leads to losses through overexposure and dependence on Global Value Chains via backward linkages; and from technological challenges, as the new industrial revolution drives higher productivity gains in the most digitally intensive sectors of manufacturing. By demonstrating that regions differ not only in their exposure to these challenges but also in their capacity to adapt and thrive, the paper provides valuable insights for policymakers aiming to address regional disparities and foster more balanced, sustainable productivity growth across the EU.