Governance as the Deep Determinant: Political Stability, Natural Resource Rents, and the Conditional Growth Dividend of the Green Transition in Advanced Economies

Abstract

Purpose: Whether the green transition drives growth in advanced economies remains an empirical question. This study examines the growth effects of Environmental Policy Stringency, Green Energy Adoption, ICT Adoption, and Natural Resource Rents in 20 advanced OECD economies (2000–2022), with Political Stability moderating the resource–growth relationship. Design/Methodology/Approach: A sequential second-generation panel pipeline: Pesaran (2004) cross-sectional dependence, Pesaran (2007) CIPS unit root, Westerlund (2007) cointegration, and Pesaran–Yamagata (2008) slope homogeneity tests; Augmented Mean Group and Common Correlated Effects Mean Group long-run estimators; two-step System GMM with Windmeijer-corrected standard errors for moderation; and FMOLS-MG robustness checks. Findings: No sustainability driver has a significant unconditional association with GDP growth in the preferred CSD-robust AMG specification. The contribution is a significant institutional conditioning effect: the NRR × PS interaction is negative and significant (b = −0.223, SE = 0.074, p = .007), so the positive resource–growth association weakens as political stability rises — a Dutch Disease dampening channel in high-governance OECD environments. Implications/Originality/Value: Among the first studies to uncover an institutional conditioning channel of resource rents in advanced OECD economies using CSD-robust estimators. Advanced economies should prioritise independent fiscal councils, statutory resource-revenue rules, and market-based environmental policy instruments.