Correlation between nitrous oxide emissions and economic growth in Vietnam: An autoregressive distributed lag analysis

Abstract

In this study, a panel autoregressive distributed lag (ARDL) approach was employed to investigate the nexus between N2O emissions and economic growth in Vietnam with respect to six parameters, i.e., gross domestic product (GDP), foreign direct investment (FDI), gross fixed capital formation (GDI), industry (IND), services (SEV), and trade openness (TRO), respectively, from 1994 to 2018. The obtained results revealed that all factors impact N2O emissions and that the increase in GDP, IND, and FDI could reduce the emissions, with coefficients of −0.011, −0.022, and −0.015, respectively. On the other hand, GDI, SEV, and TRO significantly increased the N2O emissions, with coefficients of 0.015, 0.006, and 0.001, respectively. The adjusted regression of this model was 0.982. Based on the analysis results, the study also proposed some policy implications as follows, which reduce the intensity of N2O emissions while simultaneously promoting economic growth: (1) Reduce SEV and TRO toward the contribution to GDP growth, such as IND, construction, transport, agriculture, and tourism SEV; (2) increase the use of IND and GDI; and (3) perfect the legal framework to encourage economic sectors and businesses to effectively use natural resources, especially re-valuing the cost of carbon emissions.