Zhenyu Dong, Rimsha Arshad
ABSTRACT Resource efficiency (RSE) is key to sustainable development and is defined as the ability of an economy to generate increased value using fewer resources and reduce environmental impacts. This study estimates the impact of green growth (GRG), education (EDC), natural resources (NRS), institutional quality (INQ), carbon emissions intensity (CI), and financial inclusion (FIN) on RSE using a panel data set from G20 countries (2000–2022). With CS‐ARDL, the analysis captures short‐ and long‐run relationships and addresses cross‐sectional dependence and heterogeneity. Subgroup analysis for developed and developing economies is used in conjunction with FE‐DKSE to ensure the model's robustness. The results validate a steady long‐run equilibrium relationship and show that RSE is dynamically persistent. Consistent with the logic of the Green Paradox, GRG shows long‐term positive effects on RSE that are delayed, while its short‐term impacts are weak. In developed economies, CI greatly lowers RSE, lending credence to the EKC theory; however, in developing economies, its short‐term impacts are minimal. In advanced economies, FIN greatly improves RSE. The interaction term shows that the long‐term effect of FIN on RSE is amplified by INQ. In developing economies, however, this supplementary effect is less pronounced, which may be due to limitations in governance and structural factors. The findings indicate that sustainability transitions depend on financial deepening and institutional strength across development stages, highlighting the need for inclusive finance and strong governance to support long‐term resource‐efficient growth in line with SDGs 9, 12, 13, and 16.