Critical Perspectives on Crude Palm Oil’s Role in Developing Economies: Development Engine, Environmental Externalities, and Asymmetric Sustainability Governance

This journal reviews the dual role of crude palm oil (CPO) in the economies of developing countries, particularly Indonesia and Malaysia, as a driver of growth and a source of environmental externalities. Through a critical review of literature from 2000–2025 from Scopus and Web of Science, this study shows that palm oil significantly contributes to GDP, exports, employment, and rural development, including for millions of smallholders. However, palm oil expansion is also associated with deforestation, peatland conversion, emissions, biodiversity loss, and land conflicts. This study highlights that economic benefits and ecological impacts cannot be viewed separately as they are interconnected within an unequal global value chain. The implication is that palm oil governance needs to move towards an inclusive landscape approach, strengthening environmental protection, reducing the certification burden on smallholders, and balancing global standards with the development needs of producing countries.