Quantile Effect of Economic Factors and Energy Consumption on Environmental Degradation in Vietnam

Abstract

This study aims to highlight the asymmetric impact of economic growth (GDP), trade openness (TO), energy consumption (EC), foreign direct investment (FDI), and financial development (FD) on carbon dioxide (CO2) emissions in Vietnam over the period 1990–2022, using quantile-on-quantile regression and Granger causality in quantiles techniques. Our mainstream findings indicate that the selected macroeconomic indicators have a strong positive effect on CO2 emissions in this country, and this effect is more pronounced in the lowest and highest quantiles of the respective variables. In addition, the results of Granger causality suggest a bidirectional causal relationship between the examined indicators. These findings suggest that fostering economic growth, promoting trade openness, managing energy consumption, encouraging foreign direct investment, and enhancing financial development can contribute to a sustainable environment in Vietnam.