Title: Impact of foreign direct investment and urbanisation on CO2 emissions in Vietnam

Authors: Ho Thuy Ngoc; Bui Anh Tuan; Nguyen Van Duy; Dao Trung Kien; Nguyen Ngoc Dat

Addresses: Foreign Trade University, 91 Chua Lang, Dong Da, Hanoi, Vietnam ' Foreign Trade University, 91 Chua Lang, Dong Da, Hanoi, Vietnam ' Quantitative Analysis Joint Stock Company, No. 12, 354/99/27 Truong Chinh, Dong Da, Hanoi, Vietnam ' Hanoi University of Science and Technology, No. 1 Dai Co Viet, Hai Ba Trung, Hanoi, Vietnam ' Foreign Trade University, 91 Chua Lang, Dong Da, Hanoi, Vietnam

Abstract: Vietnam is considered one of the countries mostly affected by climate change due to CO2 emissions. Urbanisation and foreign direct investment have been argued to be main causes. This study examines the impact of foreign direct investment and urbanisation on CO2 emissions in Vietnam by applying the autoregressive distributed lag (ARDL) model, testing reliability and correcting model. The research data was collected from the World Bank's tracking database between 1985 and 2016. The causal relationship among variables shows the impacts in short run and long run are different. We find that the relation between urbanisation and CO2 emissions has changed from U-shaped in short-term with the optimal lag 2 into inverse U-shape in long-term. We realise that foreign direct investment is positively related to CO2 emission in short run while there is no such effect in the long run. Conclusions and policy implication for Vietnam are given accordingly.

Keywords: CO2 emissions; foreign direct investment; FDI; GDP; urbanisation.

DOI: 10.1504/IJBG.2021.113276

International Journal of Business and Globalisation, 2021 Vol.27 No.3, pp.313 - 332

Received: 25 Oct 2018
Accepted: 04 Dec 2018

Published online: 15 Feb 2021 *

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