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Sustainable development is often explained through economic growth, institutions, or productive sophistication. This paper develops the Capability Transformation Model of Sustainable Development, which conceptualizes development as the sequential transformation of Social Capacity, Political Capacity, and Economic Capacity. Using a balanced panel of 132 countries (2002–2023), with Voice and Accountability, Government Effectiveness, Economic Complexity, and Planetary-adjusted Human Development as proxies, the analysis employs System GMM, causal mediation, and structural equation modelling. Results support a significant sequential pathway linking the three capacities to sustainable development. The paper reconceptualizes structural transformation as capability transformation culminating in Ever-Flourishing Human Conditions.
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Ehiabhi et al. (2026) studied this question.
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