Mapping Strategic Innovation Capacity and Sustainable Development in the European Union: Evidence from Grey Clustering

This paper evaluates the extent to which European Union member states show alignment between strategic innovation capacity and sustainable development outcomes. To achieve this objective, indicators were collected from Eurostat for two dimensions: strategic capacity for innovation (public expenditure on research and development, human resources in science and technology, and the higher education graduation rate) and sustainable development outcomes (real GDP per capita, employment rate, risk of poverty or social exclusion, and greenhouse gas emissions). Going beyond traditional literature, we develop an analysis based on grey clustering using multiple scenarios to illustrate the complex, non-linear relationships and structural bottlenecks in member states. The stability of the classifications was further examined through threshold sensitivity testing across all scenarios and through 200,000 weight-perturbation simulations for an illustrative boundary case. The results reveal distinct performance typologies: a resilient group of “systemic leaders” (including Denmark, Sweden, and the Netherlands) demonstrating consistent excellence across all applied prioritization scenarios, and a stagnant core facing structural challenges regarding both innovation and sustainability (such as Romania and Hungary). The dynamic analysis covering 2021–2024 suggests that strong innovation-capacity indicators are not necessarily associated with equally strong sustainability-outcome indicators, while certain economies in Central and Eastern Europe show positive convergence trends. Supported by stability simulations conducted across multiple scenarios, the study highlights significant alignment gaps between innovation-capacity indicators and sustainability-outcome indicators across the European Union and offers public policy recommendations to stimulate sustainable cohesion and technology adoption.