The Nexus Between Economic Growth, Energy Consumption, Technology Innovation, and CO₂ Emissions in Vietnam

Ha Thi Thu Nguyen, The University of Danang, University of Economics, Da Nang, VietnamFollow

ORCID

H. T. T. Nguyen: https://orcid.org/0000-0002-3134-6106

Keywords

CO2 emissions, Economic growth, Renewable energy, Sustainable development, Technological innovation

Abstract

Vietnam's rapid economic growth has intensified environmental pressures, heightening concerns about the country's ability to decouple growth from rising CO₂ emissions. Although green policies and initiatives have been introduced, questions remain regarding their effectiveness and the extent to which technological innovation and renewable energy can mitigate environmental degradation. This study applies the stochastic impacts by regression on population, affluence, and technology (STIRPAT) framework and autoregressive distributed lag (ARDL) approach to investigate the short- and long-run impacts of economic growth, foreign direct investment (FDI), technological innovation, renewable energy consumption, and forest area on CO₂ emissions in Vietnam, using annual data for 1990–2023 and provisional observations for 2024. The ARDL bounds test confirms a robust long-run cointegrating relationship among the variables. Empirical results indicate that economic growth is a key driver of long-run emissions, whereas FDI, renewable energy, technological innovation, and forest expansion play significant roles in reducing emissions over time. Short-run error correction estimates reveal that economic growth, FDI, and innovation initially contribute to rising emissions, but renewable energy and forest area exert consistent mitigating effects. Granger causality analysis shows predictive precedence from FDI, forest area, and technological innovation to emissions, emphasizing their potential as policy levers. Policy recommendations emphasize attracting green FDI, incentivizing renewable energy, and strengthening forest protection to facilitate Vietnam's transition toward low-carbon and sustainable growth.

Recommended Citation

Nguyen, H. (2026). The Nexus Between Economic Growth, Energy Consumption, Technology Innovation, and CO₂ Emissions in Vietnam. Economic and Business Review, 28(2), 73-88. https://doi.org/10.15458/2335-4216.1369