The Role of Public Debt in the Transition Toward a Regenerative Economy of Southeast European Countries

Amra Babajić and Mirnesa Baraković Nurikić

EconStor Conference Papers from ZBW - Leibniz Information Centre for Economics

Abstract: For decades, decision-makers at national, regional, and global levels have been adopting policies aimed at addressing environmental pollution. At the same time, the human population, global economy, and worldwide energy consumption continue to grow. Increasing investment in renewable energy sources has become imperative. In this context, the concept of a regenerative economy emerges, requiring investments in renewables, research, and innovation. The assumption is that countries with lower public debt have more fiscal space to invest in renewable energy, research, and development, while those with high public debt face limited opportunities for such endeavors. The main objective of this paper is to classify Southeast European (SEE) countries according to the level of development of their regenerative economies and to determine whether public borrowing serves as a catalyst for accelerating the transition toward a regenerative economy-or rather poses an obstacle to that path. The analysis will be conducted using indicators such as: Public Debt (% of Gross Domestic Product - GDP thereafter), Renewable Energy Share (%), CO₂ Emissions (tons per capita), R&D Expenditure (% of GDP), and Sustainable Development Goal 15 (SDG15), covering the period from 2010 to 2023. The main findings suggest that SEE countries differ significantly in terms of their regenerative economy development, and that public debt plays a substantial role in shaping their transition. These insights offer valuable guidance for policymakers in designing strategies to enhance national and regional competitiveness, attract foreign direct investment, and guide investors-especially since countries with higher R&D investment offer more favorable conditions for green investments and innovation development. Moreover, this cluster analysis can contribute to strengthening regional cooperation in SEE because it facilitates the identification of leader countries and countries that need additional support and knowledge transfer.

Keywords: Public debt; regenerative economy; transition; Southeast Europe (search for similar items in EconPapers)
JEL-codes: F64 O40 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esconf:343404

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