Trade openness, resource rents and geopolitical risk under governance thresholds: panel quantile evidence from OECD economies
Abstract
In an era of geopolitical volatility and environmental strain, achieving the dual objectives of climate action and sustainable growth requires robust institutions capable of transforming risk into resilience. This study examines how governance (GOV) quality moderates the effects of geopolitical risk (GPR), trade openness and natural resource rents (NRRs) on ecological footprint (EFP) and economic growth across 19 OECD economies from 1990 to 2022. Using the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) framework alongside Method of Moments Quantile Regression (MMQR) and quantile Granger causality tests, the analysis accounts for cross-sectional dependence, slope heterogeneity and distributional asymmetries. Results indicate that GPR and resource rents intensify ecological pressure and constrain growth, while renewable energy consumption (REC), globalization and strong GOV foster sustainability. Interaction and threshold models reveal that once GOV surpasses critical levels, the adverse environmental and economic effects of geopolitical instability diminish sharply, allowing economies to decouple growth from ecological degradation. The quantile findings confirm that institutional strength and clean-energy transitions are particularly effective at higher levels of environmental stress. Overall, the study demonstrates that GOV thresholds are pivotal for aligning economic expansion with environmental integrity, offering policy pathways for resilient, low-carbon development consistent with the objectives of Sustainable Development Goals (SDGs) 13 and 8.