Direct and indirect influence of natural resources and regional integration on green growth: Exploring the role of political risk in South Asia

Abstract

Within the context of sustainability, an integral focus of ongoing research is centred on cultivating economic expansion that prioritizes environmental friendliness and reduces resource dependence. This approach is commonly referred to as green economic growth. Hence, the present study strives to explore the heterogeneous effects of regional trade and economic integration, natural resource reliance, and political risk while also examining how regional integration index combined with natural resource factors influences the green growth trajectory of selected south Asian countries. The cross-sectional dependence and slope heterogeneity of the countries have been examined. Stationarity properties are checked before proceeding to the long-run relationship and empirical estimation procedure. Method of Moments Quantile Regression is employed to understand the variables' asymmetric association. The outcomes revealed the positive influence of regional integration on green growth, while political risk and natural resources pose a negative impact. It can be observed that the negative consequences of natural resources are neutralized with higher trade and financial integration. Lastly, the causality test is used to investigate the causal association between the variables. The outcomes imply that Asian countries emphasize shaping natural resource extraction policies and stabilizing their political situation to get the maximum benefit from green growth.