Can effective natural resource governance unlock green trade's sustainability potential in carbon-intensive countries?

Abstract

The climate mitigation potential of green trade (GTD) is often constrained by the global green divide and weak resource governance in carbon-intensive countries. This study investigates how effective natural resource governance (NRG) mediates and enhances the impact of GTD on environmental sustainability from 2001 to 2022 in alignment with the sustainable development goals (SDGs), particularly SDG-7, SDG-12, and SDG-13. Guided by ecological modernization theory, the empirical approach applies a two-step system generalized method of moments estimator, supported by Driscoll–Kraay and Panel-Corrected Standard Errors robustness checks, to evaluate both the direct effects of GTD and the governance-mediated mechanisms shaping environmental performance. The results show that while GTD contributes to emission reductions, its decarbonization effect becomes substantially stronger under robust governance structures. Effective NRG directs trade-related gains toward green industrial upgrading, efficient energy use, sustainable resource management, and clean-technology diffusion. These findings underscore that achieving low-carbon transitions in carbon-intensive countries requires pairing expanded green trade with strengthened natural resource governance capable of channeling trade benefits toward sustainable development and SDG-aligned climate objectives.