IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v54y2016icp1506-1514.html
   My bibliography  Save this article

Energy consumption and economic growth in Vietnam

Author

Listed:
  • Tang, Chor Foon
  • Tan, Bee Wah
  • Ozturk, Ilhan

Abstract

This study attempts to analyse the relationship between energy consumption and economic growth in Vietnam using the neoclassical Solow growth framework for the 1971–2011 period. The concept and methods of cointegration and Granger causality are used to establish the relationship between the variables of interest. Our results confirm the existence of cointegration among the variables. In particular, energy consumption, FDI and capital stock were found positively influence economic growth in Vietnam. The Granger causality test revealed unidirectional causality running from energy consumption to economic growth. Hence, Vietnam is an energy-dependent economy and any energy or environment policy drawn up in an attempt to conserve energy will jeopardise the process of economic development in Vietnam. For this reason, the renewable energy policy should be given attention to provide sufficient supplies of energy to speed up economic expansion. Investment in R&D may be required to incentivise private/public institutions to engage in this innovation, while the awareness for energy-saving policy among public could be integrated to meet social economic development.

Suggested Citation

  • Tang, Chor Foon & Tan, Bee Wah & Ozturk, Ilhan, 2016. "Energy consumption and economic growth in Vietnam," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 1506-1514.
  • Handle: RePEc:eee:rensus:v:54:y:2016:i:c:p:1506-1514
    DOI: 10.1016/j.rser.2015.10.083
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032115011624
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mantalos Panagiotis, 2000. "A Graphical Investigation of the Size and Power of the Granger-Causality Tests in Integrated-Cointegrated VAR Systems," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 4(1), pages 1-18, April.
    2. Karanfil, Fatih, 2008. "Energy consumption and economic growth revisited: Does the size of unrecorded economy matter?," Energy Policy, Elsevier, vol. 36(8), pages 3019-3025, August.
    3. James E. Payne, 2010. "Survey of the international evidence on the causal relationship between energy consumption and growth," Journal of Economic Studies, Emerald Group Publishing, vol. 37(1), pages 53-95, January.
    4. Chen, Sheng-Tung & Kuo, Hsiao-I & Chen, Chi-Chung, 2007. "The relationship between GDP and electricity consumption in 10 Asian countries," Energy Policy, Elsevier, vol. 35(4), pages 2611-2621, April.
    5. Cheng, Benjamin S. & Lai, Tin Wei, 1997. "An investigation of co-integration and causality between energy consumption and economic activity in Taiwan," Energy Economics, Elsevier, vol. 19(4), pages 435-444, October.
    6. Chiou-Wei, Song Zan & Chen, Ching-Fu & Zhu, Zhen, 2008. "Economic growth and energy consumption revisited -- Evidence from linear and nonlinear Granger causality," Energy Economics, Elsevier, vol. 30(6), pages 3063-3076, November.
    7. Islam, Faridul & Shahbaz, Muhammad & Ahmed, Ashraf U. & Alam, Md. Mahmudul, 2013. "Financial development and energy consumption nexus in Malaysia: A multivariate time series analysis," Economic Modelling, Elsevier, vol. 30(C), pages 435-441.
    8. Khanh Toan, Pham & Minh Bao, Nguyen & Ha Dieu, Nguyen, 2011. "Energy supply, demand, and policy in Viet Nam, with future projections," Energy Policy, Elsevier, vol. 39(11), pages 6814-6826.
    9. Pieter Omtzigt & Stefano Fachin, 2006. "The Size and Power of Bootstrap and Bartlett-Corrected Tests of Hypotheses on the Cointegrating Vectors," Econometric Reviews, Taylor & Francis Journals, vol. 25(1), pages 41-60.
    10. Asafu-Adjaye, John, 2000. "The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries," Energy Economics, Elsevier, vol. 22(6), pages 615-625, December.
    11. Tang, Chor Foon, 2008. "A re-examination of the relationship between electricity consumption and economic growth in Malaysia," Energy Policy, Elsevier, vol. 36(8), pages 3067-3075, August.
    12. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    13. Lee, Chien-Chiang & Chang, Chun-Ping, 2008. "Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data," Resource and Energy Economics, Elsevier, vol. 30(1), pages 50-65, January.
    14. Robin L. Lumsdaine & David H. Papell, 1997. "Multiple Trend Breaks And The Unit-Root Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 212-218, May.
    15. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    16. Perron, Pierre & Rodriguez, Gabriel, 2003. "GLS detrending, efficient unit root tests and structural change," Journal of Econometrics, Elsevier, vol. 115(1), pages 1-27, July.
    17. Paresh Kumar Narayan & Stephan Popp, 2010. "A new unit root test with two structural breaks in level and slope at unknown time," Journal of Applied Statistics, Taylor & Francis Journals, vol. 37(9), pages 1425-1438.
    18. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    19. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    20. Junsoo Lee & Mark C. Strazicich, 2003. "Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1082-1089, November.
    21. Chor Foon Tang, 2010. "The Money-prices Nexus for Malaysia: New Empirical Evidence from the Time-varying Cointegration and Causality Tests," Global Economic Review, Taylor & Francis Journals, vol. 39(4), pages 383-403.
    22. Chor Foon Tang, 2009. "Electricity consumption, income, foreign direct investment, and population in Malaysia: New evidence from multivariate framework analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 36(4), pages 371-382, September.
    23. Abul Masih & Rumi Masih, 1998. "A multivariate cointegrated modelling approach in testing temporal causality between energy consumption, real income and prices with an application to two Asian LDCs," Applied Economics, Taylor & Francis Journals, vol. 30(10), pages 1287-1298.
    24. Ozturk, Ilhan, 2010. "A literature survey on energy-growth nexus," Energy Policy, Elsevier, vol. 38(1), pages 340-349, January.
    25. Benjamin S. Cheng, 1999. "Causality Between Energy Consumption and Economic Growth in India: An Application of Cointegration and Error-Correction Modeling," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 34(1), pages 39-49, January.
    26. Lean, Hooi Hooi & Smyth, Russell, 2010. "CO2 emissions, electricity consumption and output in ASEAN," Applied Energy, Elsevier, vol. 87(6), pages 1858-1864, June.
    27. Chor Foon Tang and Eu Chye Tan, 2012. "Electricity Consumption and Economic Growth in Portugal: Evidence from a Multivariate Framework Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    28. Phung Thanh Binh, 2011. "Energy Consumption and Economic Growth in Vietnam: Threshold Cointegration and Causality Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 1(1), pages 1-17, June.
    29. Bee Wah Tan & Chor Foon Tang, 2012. "The Dynamic Relationship Between Private Domestic Investment, the User Cost of Capital, Public Investment, Foreign Direct Investment and Economic Growth in Malaysia," Economia politica, Società editrice il Mulino, issue 2, pages 221-246.
    30. Masih, Abul M. M. & Masih, Rumi, 1996. "Energy consumption, real income and temporal causality: results from a multi-country study based on cointegration and error-correction modelling techniques," Energy Economics, Elsevier, vol. 18(3), pages 165-183, July.
    31. Perron, Pierre, 1997. "Further evidence on breaking trend functions in macroeconomic variables," Journal of Econometrics, Elsevier, vol. 80(2), pages 355-385, October.
    32. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    33. Ang, James B., 2008. "Economic development, pollutant emissions and energy consumption in Malaysia," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 271-278.
    34. R. Scott Hacker & Abdulnasser Hatemi-J, 2006. "Tests for causality between integrated variables using asymptotic and bootstrap distributions: theory and application," Applied Economics, Taylor & Francis Journals, vol. 38(13), pages 1489-1500.
    35. Minh Do, Tien & Sharma, Deepak, 2011. "Vietnam's energy sector: A review of current energy policies and strategies," Energy Policy, Elsevier, vol. 39(10), pages 5770-5777, October.
    36. Lutkepohl, Helmut, 1982. "Non-causality due to omitted variables," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 367-378, August.
    37. Stern, David I., 1993. "Energy and economic growth in the USA : A multivariate approach," Energy Economics, Elsevier, vol. 15(2), pages 137-150, April.
    38. Pfaff, Bernhard, 2008. "VAR, SVAR and SVEC Models: Implementation Within R Package vars," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 27(i04).
    39. Chontanawat, Jaruwan & Hunt, Lester C. & Pierse, Richard, 2008. "Does energy consumption cause economic growth?: Evidence from a systematic study of over 100 countries," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 209-220.
    40. Cheung, Yin-Wong & Lai, Kon S, 1993. "Finite-Sample Sizes of Johansen's Likelihood Ration Tests for Conintegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(3), pages 313-328, August.
    41. Perron, Pierre & Rodriguez, Gabriel, 2003. "GLS detrending, efficient unit root tests and structural change," Journal of Econometrics, Elsevier, vol. 115(1), pages 1-27, July.
    42. Fatai, K & Oxley, Les & Scrimgeour, F.G, 2004. "Modelling the causal relationship between energy consumption and GDP in New Zealand, Australia, India, Indonesia, The Philippines and Thailand," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 64(3), pages 431-445.
    43. Ghazi Shukur & Panagiotis Mantalos, 2000. "A simple investigation of the Granger-causality test in integrated-cointegrated VAR systems," Journal of Applied Statistics, Taylor & Francis Journals, vol. 27(8), pages 1021-1031.
    44. James B. Ang, 2010. "Determinants Of Private Investment In Malaysia: What Causes The Postcrisis Slumps?," Contemporary Economic Policy, Western Economic Association International, vol. 28(3), pages 378-391, July.
    45. Lean, Hooi Hooi & Smyth, Russell, 2010. "Multivariate Granger causality between electricity generation, exports, prices and GDP in Malaysia," Energy, Elsevier, vol. 35(9), pages 3640-3648.
    46. Soren Johansen, 2002. "A Small Sample Correction for the Test of Cointegrating Rank in the Vector Autoregressive Model," Econometrica, Econometric Society, vol. 70(5), pages 1929-1961, September.
    47. Mahadevan, Renuka & Asafu-Adjaye, John, 2007. "Energy consumption, economic growth and prices: A reassessment using panel VECM for developed and developing countries," Energy Policy, Elsevier, vol. 35(4), pages 2481-2490, April.
    48. Chandran, V.G.R. & Sharma, Susan & Madhavan, Karunagaran, 2010. "Electricity consumption-growth nexus: The case of Malaysia," Energy Policy, Elsevier, vol. 38(1), pages 606-612, January.
    49. Nguyen Duy Loi, 2012. "Energy consumption and economic development: Granger causality analysis for Vietnam," Working Papers 14, Development and Policies Research Center (DEPOCEN), Vietnam.
    50. Oh, Wankeun & Lee, Kihoon, 2004. "Causal relationship between energy consumption and GDP revisited: the case of Korea 1970-1999," Energy Economics, Elsevier, vol. 26(1), pages 51-59, January.
    51. Paresh Kumar Narayan & Stephan Popp, 2013. "Size and power properties of structural break unit root tests," Applied Economics, Taylor & Francis Journals, vol. 45(6), pages 721-728, February.
    52. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
    53. MacKinnon, James G, 1996. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 601-618, Nov.-Dec..
    54. Hall, Alastair R, 1994. "Testing for a Unit Root in Time Series with Pretest Data-Based Model Selection," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 461-470, October.
    55. Lean, Hooi Hooi & Smyth, Russell, 2010. "On the dynamics of aggregate output, electricity consumption and exports in Malaysia: Evidence from multivariate Granger causality tests," Applied Energy, Elsevier, vol. 87(6), pages 1963-1971, June.
    56. Chor Foon Tang, 2011. "An exploration of dynamic relationship between tourist arrivals, inflation, unemployment and crime rates in Malaysia," International Journal of Social Economics, Emerald Group Publishing, vol. 38(1), pages 50-69, January.
    57. Lorde, Troy & Waithe, Kimberly & Francis, Brian, 2010. "The importance of electrical energy for economic growth in Barbados," Energy Economics, Elsevier, vol. 32(6), pages 1411-1420, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Energy consumption; Growth; FDI;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:54:y:2016:i:c:p:1506-1514. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.