Nexus between CO 2 Emissions and Economic Growth, Industrial Production, and Foreign Direct Investment in Vietnam: Symmetric ARDL Approach

Abstract

Vietnam’s economy has been developing strongly in recent years; however, it is necessary to examine the impact of its economic activities on environmental quality. This study aims to evaluate the relationship between CO2 emissions and economic growth, industrial production, and foreign direct investment (FDI) in Vietnam. The ARDL estimation was used to process the dataset from World Bank. Results showed that economic growth, industrial production, and FDI have an impact on CO2 emissions in the long run in Vietnam. Granger Causality test also indicated that there is a causal relationship between economic growth, industrial production, and CO2 emissions in Vietnam from 1990 to 2018, at 5% statistical significance level. Proposed solutions to reduce CO2 emissions but still promote economic growth toward the green growth orientation and zero carbon target attainment are as follows: 1) reduce the use of fossil energy in industrial manufacturing and replace it by renewable energy sources; 2) use modern technology for all production sectors in economy; and 3) develop a legal framework for FDI projects selection and choose foreign investors with modern and low carbon emission technology.