Decoupling Economic Growth from Environmental Degradation in Developing Countries: A Systematic Review of Policy Effectiveness

<ns5:p>Background Achieving green growth, defined as decoupling economic expansion from environmental degradation, has become a central policy objective for developing countries. However, the effectiveness of various policy instruments remains contested and poorly synthesized. Methods This systematic literature review followed the PRISMA 2020 guidelines. A comprehensive search of the Scopus database identified 2,776 records, of which 880 proceeded to full-text screening and 23 peer-reviewed empirical studies met the inclusion criteria. Studies examining fiscal instruments, institutional reforms, and trade policies in developing and emerging economies were synthesized narratively. Results Carbon taxes and environmental taxes consistently reduce CO₂ emissions, with effect sizes ranging from −0.112 to −0.140. Green finance reduces emissions by 0.66 percent per 1 percent increase in credit allocation. Renewable energy reduces ecological footprint by 0.37 to 0.75 percent. Institutional quality moderates decoupling success, though effects vary across countries. Trade openness reduces emissions in high-income developing countries but increases them in low-income countries, supporting the pollution haven hypothesis. Conclusions Effective decoupling requires a combination of stringent fiscal instruments, institutional reforms, and targeted investments. Policy effectiveness is context-dependent; institutional capacity and income level determine outcomes. Prioritizing carbon pricing, strengthening regulatory quality, and promoting renewable energy transitions are essential for sustainable green growth in developing countries.</ns5:p>