Economic Growth, Energy Consumption and Environmental Quality: Evidence from Vietnam

Thi Lam Ho, Thuy Tien Ho


The purpose of this study is to explore the relationship between economic growth, energy consumption and environmental quality in Vietnam from 1995 to 2018 with the Autoregressive Distributed Lag Cointegration (ARDL) approach. The results confirm a long-term equilibrium relationship between CO2 (carbon dioxide) emissions, income, energy consumption, trade openness, and FDI (Foreign Direct Investment). Among those, income positively affects CO2 emissions, but its long-run elasticity is smaller than the short-run one, implying that carbon dioxide emissions decrease as income is on the increase over time. This is similar to the findings of [1] for Cambodia [2] for Turkey, [3] for Jordan, Kuwait, Qatar, South Asian countries, Latin American countries, and [3]-[4] for Viet Nam. In addition, there exists statistical evidence of the impact of energy consumption, trade openness and FDI flows on the level of environmental pollution in Vietnam. From that, the author proposes a few policy implications in protecting the environment and promoting economic growth in Vietnam.


ARDL; CO2; Economic growth; Energy consumption; Environmental quality

Full Text:



Ozturk I. and U. Al-Mulali. 2015. Investigating the validity of the environmental Kuznets curve hypothesis in Cambodia. Ecological Indicators 57: 324–330.

Ozturk I. and A. Acaravci. 2013. The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Economics 36: 262–267.

Narayan P.K. and S. Narayan. 2010. Carbon dioxide emissions and economic growth: Panel data evidence from developing countries. Energy Policy 38(1): 661–666.

Al-Mulali U., Saboor B., and Ozturk I., 2015. Investigating the environmental Kuznets curve hypothesis in Vietnam. Energy Policy 76: 123–131.

Ahmed K. and W. Long. 2012. Environmental Kuznets Curve and Pakistan: An Empirical Analysis. Procedia Economics and Finance 1(12): 4–13.

Grossman G. and A. Krueger. 1991. Environmental Impacts of a North American Free Trade Agreement. National Bureau of Economic Research, 3914 (November 1991).

Panayotou T., 1997. Demystifying the environmental Kuznets curve: Turning a black box into a policy tool. Environment and Development Economics 2(4): 465–484.

Shafik N., 1994. Economic development and environmental quality: an econometric analysis. In Oxford Economic Papers (Vol. 46, Issue Special Issue on Environmental Economics, pp. 757–773). Oxford University Press.

Shafik N. and S. Bandyopadhyay. 1992. Economic growth and environmental quality : time series and cross-country evidence (No. WPS904; Policy Research Working Paper).

Shu L., Fantang Z., Huaiyang F., and Zhencheng X., 2012. An empirical test of the environmental Kuznets Curve in Guangdong Province, China. APCBEE Procedia, 1(January): 204–209.

Lindmark M., 2002. An EKC-pattern in historical perspective: Carbon dioxide emissions, technology, fuel prices and growth in Sweden 1870-1997. Ecological Economics 42(1–2): 333–347.

Akbostanci E., Türüt-Aşik S., and Tunç G.I., 2009. The relationship between income and environment in Turkey: Is there an environmental Kuznets curve? Energy Policy 37(3): 861–867.

Taguchi H., 2012. The environmental Kuznets curve in Asia: The case of sulphur and carbon emissions. Asia-Pacific Development Journal 19(2): 77–92.

Tang C.F. and B.W. Tan. 2015. The impact of energy consumption, income and foreign direct investment on carbon dioxide emissions in Vietnam. Energy 79(C): 447–454.

Lütkepohl H., 1982. Non-causality due to omitted variables. Journal of Econometrics 19(2–3): 367–378.

Arouri M.E.H., Youssef A.B., M’henni H., and Rault C., 2012. Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy Policy 45: 342–349.

Halicioglu F., 2009. An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy 37(3): 1156–1164.

Kuznets, S., 1955. Economic growth and income inequality. The American Economic Review 45(1): 1-28.

Panayotou T., 1993. Empirical tests and policy analysis of environmental degradation at different stages of economic development. In ILO Working Papers (No. 992927783402676; ILO Working Papers). International Labour Organization.

Stern D.I., 2004. The rise and fall of the environmental Kuznets Curve. World Development 32(8): 1419–1439.

IBRD, 1992. World Development Report 1992 : Development and the Environment. The World Bank.

Ang J.B., 2007. CO2 emissions, energy consumption, and output in France. Energy Policy 35: 4772–4778.

Jebli M.B and S.B. Youssef. 2015. Output, renewable and non-renewable energy consumption and international trade: Evidence from a panel of 69 countries. Renewable Energy 83: 799–808.

Sarkodie S.A. and I. Ozturk. 2020. Investigating the Environmental Kuznets Curve hypothesis in Kenya: A multivariate analysis. Renewable and Sustainable Energy Reviews 117(109481): 1-12.

Tang C.F., Tan B.W., and I. Ozturk. 2016. Energy consumption and economic growth in Vietnam. Renewable and Sustainable Energy Reviews 54(2016): 1506–1514.

Jebli M.B, Youssef S.B, and Ozturk I., 2016. Testing environmental Kuznets curve hypothesis: The role of renewable and non-renewable energy consumption and trade in OECD countries. Ecological Indicators 60(2016): 824–831.

Apergis N. and I. Ozturk. 2015. Testing environmental Kuznets curve hypothesis in Asian countries. Ecological Indicators 52: 16–22.

Ozcan B., 2013. The nexus between carbon emissions, energy consumption and economic growth in Middle East countries: A panel data analysis. Energy Policy 62: 1138–1147.

Le H.P. and I. Ozturk. 2020. The impacts of globalization, financial development, government expenditures, and institutional quality on CO2 emissions in the presence of environmental Kuznets curve. Environmental Science and Pollution Research 27(18): 22680–22697.

Nasreen S., Anwar S., and Ozturk I., 2017. Financial stability, energy consumption and environmental quality: Evidence from South Asian economies. Renewable and Sustainable Energy Reviews 67: 1105–1122.

Pesaran M.H., Shin Y., and Smith R.J., 2001. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics 16(3): 289–326.

Jalil A. and S.F. Mahmud. 2009. Environment Kuznets curve for CO2 emissions: A cointegration analysis for China. Energy Policy 37(12): 5167–5172.

Glasure Y.U., 2002. Energy and national income in Korea: Further evidence on the role of omitted variables. Energy Economics 24(4): 355–365.

Hwang D.B.K. and B. Gum. 1991. The causal relationship between energy and GNP: The case of Taiwan. The Journal of Energy and Development 16(2): 219–226.

Masih A.M.M. and R. Masih. 1996. Energy consumption, real income and temporal causality: Results from a multi-country study based on cointegration and error-correction modelling techniques. Energy Economics 18(3): 165–183.

Narayan P.K., Narayan S., and Prasad A., 2008. A structural VAR analysis of electricity consumption and real GDP: Evidence from the G7 countries. Energy Policy 36(7): 2765–2769.

Stern D.I., 1993. Energy and economic growth in the USA. A multivariate approach. Energy Economics 15(2): 137–150.

Stern D.I., 2000. A multivariate cointegration analysis of the role of energy in the US macroeconomy. Energy Economics 22(2): 267–283.

Beghin J.C., Bowland B.J., Dessus S., Roland-Holst D., and Van Der Mensbrugghe D., 2002. Trade integration, environmental degradation, and public health in Chile: Assessing the linkages. Environment and Development Economics 7(2): 241–267.

Nasir M. and F. Ur Rehman. 2011. Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation. Energy Policy 39(3): 1857–1864.

Suri V. and D. Chapman. 1998. Economic growth, trade and energy: Implications for the environmental Kuznets curve. Ecological Economics 25(2): 195–208.

Birdsall N. and D. Wheeler. 1993. Trade Policy and Industrial Pollution in Latin America: Where Are the Pollution Havens? The Journal of Environment and Development 2(1): 137–149.

Ferrantino M.J., 1997. International Trade, Environmental Quality and Public Policy. The World Economy 20(1): 43–72.

Lucas R.E., Wheeler D.R., and Hettige H., 1992. Economic development, environmental regulation, and the international migration of toxic industrial pollution: 1960-88. In P. Low (Ed.), International Trade and the Environment, World Bank discussion (pp. 67–87).

Hoffmann R., Lee C.G., Ramasamy B., and Yeung M., 2005. FDI and pollution: A Granger causality test using panel data. Journal of International Development 17(3): 311–317.

Merican Y., Yusop Z., Noor Z.M., and Law S.H., 2007. Foreign Direct Investment and the Pollution in Five ASEAN Nations. International Journal of Economics and Management 1(2).

Khan M.A. and I. Ozturk. 2020. Examining foreign direct investment and environmental pollution linkage in Asia. Environmental Science and Pollution Research 27(7): 7244–7255.

Selden T.M. and D. Song. 1994. Environmental quality and development: Is there a kuznets curve for air pollution emissions? Journal of Environmental Economics and Management 27(2): 147–162.

Baumol W. and W. Oates. 1988. The Theory of Environmental Policy (2nd ed.). Cambridge University Press.

Baumol W., 1971. Environmental Protection, International Spillovers, and Trade. Almkvist and Wicksell.

Al-mulali U. and C. Foon Tang. 2013. Investigating the validity of pollution haven hypothesis in the gulf cooperation council (GCC) countries. Energy Policy 60: 813–819.

Dinda S., 2004. Environmental Kuznets Curve hypothesis: A survey. Ecological Economics 49(4): 431–455.