This paper investigates the economic effects of energy efficiency in the Western Balkans, a region facing both structural energy challenges and the need for convergence with European Union (EU) standards. Using a balanced panel dataset for five Western Balkan economies (2005-2022), the study applies a panel autoregressive distributed lag (ARDL) model estimated with pooled mean group (PMG) and mean group (MG) estimators. The empirical results confirm a stable long-run relationship between energy efficiency and economic growth. Reductions in energy intensity are associated with higher GDP per capita, while renewable energy shares also exert a positive and significant long-run impact. In contrast, short-run results highlight adjustment costs, with renewable integration producing negative effects, whereas gross fixed capital formation plays a central role in driving short-term growth. The error-correction term indicates rapid convergence to the long-run equilibrium in the MG specification. The findings provide important policy implications: energy efficiency should be treated not merely as an environmental obligation but as a strategic driver of sustainable growth and EU integration in the Western Balkans. The study contributes to the literature by offering one of the first systematic empirical assessments 149 Third International Scientific Conference of the efficiency–growth nexus in the region, linking global evidence with the specific transition challenges of small emerging economies.