Green Fiscal Policy and Inclusive Economic Development in Emerging Economies: A Systematic Review with Insights from Southeast Asia

Abstract

This study reviews how green fiscal policies influence inclusive economic development in Southeast Asia. It explores whether instruments such as carbon taxes, subsidy reforms, and green bonds can achieve both environmental goals and social equity. Using a systematic review of peer‑reviewed studies and reports published up to early 2021, the evidence particularly from Indonesia shows that carbon pricing and subsidy reforms reduce emissions but can be regressive when no compensatory measures are in place, as poorer households face higher relative costs. Simulations also indicate that revenue recycling through social transfers, green investments, or targeted subsidies can offset these effects and make policies more equitable. While fiscal tools such as green bonds and renewable energy incentives are emerging in the region, empirical evaluations of their social outcomes remain limited. The findings emphasize that careful policy design and revenue use are essential for green fiscal policy to advance both sustainability and inclusivity in Southeast Asia.