Critical Materials Import and Environmental Preferences: Evidence From G20 and N11 Economies

Critical materials such as lithium and cobalt are indispensable for achieving the United Nations' Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). While these materials enable the deployment of low-carbon technologies, including electric vehicle batteries and renewable energy systems, they also present environmental, socio-economic, and geopolitical challenges due to their carbon-intensive extraction and global trade dynamics. This study employs a 20-year panel dataset from G20 and N-11 countries to investigate the relationship between critical material imports and national environmental performance, focusing on CO$_2$ emissions, GHG emissions, and embodied carbon in exports. Grounded in the dynamic capabilities framework, the research examines how countries reconfigure institutional arrangements, deploy circular economy strategies, and leverage innovation to balance sustainability goals with critical material dependencies. The findings reveal that lithium and cobalt imports contribute to improved environmental outcomes when accompanied by strong national-level dynamic capabilities, highlighting the importance of policy integration, technological adaptation, and resource efficiency in advancing national sustainability strategies.