The Role of Microeconomic Policies in Promoting Economic Growth and Achieving Sustainable Development in Developing Countries

Abstract

This study examines the impact of microeconomic policies on economic growth and sustainable development in developing countries, focusing on policy interventions such as tax incentives, microfinance, and regulatory reforms. Using a mixed-methods approach, the research analyzes quantitative data on growth indicators—such as GDP, employment, and poverty rates—alongside qualitative insights from case studies across diverse regions, including Sub-Saharan Africa, South Asia, and Latin America. The findings suggest that well-structured microeconomic policies can significantly enhance economic growth and reduce poverty, particularly when tailored to local infrastructure, resource availability, and institutional capacities. Tax incentives and regulatory simplifications show positive effects on small and medium-sized enterprises, driving GDP growth and employment in regions with supportive infrastructure. Meanwhile, microfinance initiatives boost entrepreneurship and support poverty alleviation in areas with limited access to traditional banking services. However, the study reveals that growth-focused policies can sometimes conflict with environmental objectives, underscoring the need for balanced approaches that incorporate sustainable development goals. This research contributes to economic growth theories by integrating localized insights into the role of microeconomic policies in fostering inclusive, sustainable development. The practical implications provide policymakers with strategies to design adaptable policy frameworks that address immediate economic needs and support long-term sustainability.