Enabling the twin transition: the role of regional competitiveness and policy

Uneven regional competitiveness poses a fundamental challenge to the twin transition. While some regions are well-positioned to capitalize on emerging opportunities, regions lacking the necessary capabilities risk further marginalization. Using a unique combination of simulation modelling and econometric analysis, we investigate how regional competitiveness shapes the capacity of regions to engage in the twin transition and how policy can reshape this relationship. Employing an empirically grounded agent-based model of regional technological knowledge creation across 292 European NUTS2 regions, we simulate alternative policy scenarios varying in their emphasis on inter-regional collaboration and directionality. The resulting scenario-specific transition outcomes are then analysed econometrically, using regional competitiveness dimensions to explain variation in simulated performance and to assess how policy alters these relationships. Our findings show that technological competitiveness and network embeddedness are the most robust enablers of transition outcomes, while innovation-related economic competitiveness plays a less consistent role. Importantly, while all policy interventions reduce regional dependence on pre-existing conditions, integrated policy mixes combining directionality and collaboration do so most effectively, broadening participation across regions and limiting the risk of widening interregional disparities.