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Examining the Correlation among Economic Development, Foreign Direct Investment, and CO 2 Emissions by Utilizing the VECM Model—Empirical Study in Vietnam

Author

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  • Trang Mai Tran

    (Vietnam Institute of Economics, Vietnam Academy of Social Sciences, Hanoi 10000, Vietnam)

  • Thao Huong Phan

    (Accounting and Auditing Faculty, Thuong Mai University, Hanoi 10000, Vietnam)

  • Thao Viet Tran

    (Department of Research Administration, Thuong Mai University, Hanoi 10000, Vietnam)

  • Anh Tram Thi Le

    (Accounting and Auditing Faculty, Thuong Mai University, Hanoi 10000, Vietnam)

Abstract

From 1990 to 2019, Vietnam entered a period of economic growth, attracting foreign investment. However, during this period, CO 2 emissions also increased significantly. This paper will examine the short- and long-term relations of Vietnam’s relationship among FDI, economic growth, and CO 2 emissions based on the data on CO 2 , GDP, and FDI of Vietnam in 1990–2019. This article uses the VECM model to test the effect among variables. Research results identify an impact and causal correlation among CO 2 emissions and economic growth and foreign direct investment in Vietnam. Research results show a long-term relationship between CO 2 emissions, GDP, and FDI. The authors did not find a short-run relationship between the above variables. Assessing impacts of CO 2 emissions on economic growth and foreign direct investment will help policymakers make reasonable policies to balance the increase in foreign investment capital and economic growth and reduce CO 2 to achieve the commitment in COP26.

Suggested Citation

  • Trang Mai Tran & Thao Huong Phan & Thao Viet Tran & Anh Tram Thi Le, 2022. "Examining the Correlation among Economic Development, Foreign Direct Investment, and CO 2 Emissions by Utilizing the VECM Model—Empirical Study in Vietnam," Sustainability, MDPI, vol. 14(19), pages 1-15, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:19:p:12621-:d:933313
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    1. Dung Tien Pham & Hieu Van Pham & Tuyen Quang Dang, 2023. "Renewable Energy Consumption, Energy Efficiency, Trade, Economic Development and FDI on Climate Change in Vietnam," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 8-14, November.

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