Balancing Growth and Sustainability: Green Finance and Renewable Energy Pathways for Resource‐Rich Economies

ABSTRACT This study examines how green finance mechanisms, renewable energy innovation, and environmental policies interact to promote ecological sustainability in resource‐rich economies, addressing the critical challenge of overcoming the resource curse through strategic policy combinations. Utilizing panel data from 38 resource‐rich countries over 2000–2022 and employing GMM‐IV estimation techniques to address endogeneity concerns, the analysis reveals that green finance mechanisms significantly reduce ecological footprint (coefficient = −0.084, p < 0.01), while renewable energy deployment generates substantial long‐term environmental benefits (coefficient = −0.027, p < 0.01). The temporal analysis demonstrates that green finance effects emerge gradually, with limited short‐term impact but substantial effectiveness over 5‐year periods, while renewable energy policies show more immediate benefits. Interaction effects analysis confirms strong policy complementarities, with green finance effectiveness increasing by 110% when combined with renewable energy deployment. The subsample analysis reveals systematic differences between oil‐rich and non‐oil‐resource economies, with oil‐rich countries demonstrating higher sensitivity to green finance but lower renewable energy effectiveness. Causality testing indicates unidirectional relationships from green finance and forest conservation to environmental outcomes, emphasizing the need for proactive policy intervention rather than reactive approaches. These findings provide evidence‐based guidance for designing comprehensive sustainability strategies that leverage resource abundance as a catalyst for environmental improvement while addressing implementation challenges across different institutional contexts.