The Moderating Role of Governmental Artificial Intelligence in Shaping Green Growth Dynamics in the European Union

In the contemporary era of accelerated artificial intelligence (AI) development, governments are progressively embedding AI technologies within administrative structures and public service delivery systems, thereby influencing green growth through a variety of direct and indirect mechanisms. This study examines the impact of governmental artificial intelligence, captured by readiness of governments for the adoption of artificial intelligence, alongside key macroeconomic, social, and institutional governance factors, on green growth across European Union countries between 2019 and 2023. Employing a combination of static and dynamic panel econometric techniques (OLS, FGLS, PCSE, LIML-IV, and system GMM), the analysis reveals that governmental deployment of AI exerts a positive effect on green growth within the sample. The empirical results demonstrate that governments’ readiness to systematically deploy AI exerts a positive influence on green growth, thereby supporting the hypothesis that governmental AI capabilities foster sustainable development. The positive coefficient on the lagged green growth, together with the stable significance levels across all model specifications, provides quantitative evidence that governmental AI readiness has a positive and statistically significant effect on green growth. The synergistic interaction among macroeconomic, social, and institutional governance factors provides strong empirical support for the design of robust policies that promote the implementation of AI at the governmental level, coupled with mechanisms to stimulate economic expansion, public investment, and foreign capital inflows.