Causality relationship between growth and energy use: a case study of Vietnam

Abstract

Recently, Vietnam is becoming an energy-dependent country. In spite of the important contribution of energy to Vietnam economic growth via import and industrial production, the increase in energy consumption also raises the concerns of resource scarcity, the overwhelming dependence on energy, and sustainable growth. This study investigates the causal relationship between economy growth and energy consumption in the case of Vietnam from 1986 to 2013. Through testing different types of Granger Causality based on the Vector Error Correction Model (VECM), the main finding is the unidirectional Granger causal connection from energy consumption to economic growth, which is different from previous research in Vietnam. In addition, the paper indicates the negative effect of energy onsumption on economic growth.