International Journal of Business and Economics Volume 18, No. 3 December, 2019

Impacts of Trade Liberalisation on CO2 Emissions in Vietnam

Mai T. T. Tran

Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University, New Zealand

Christopher Gan

Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University, New Zealand

Baiding Hu

Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University, New Zealand

Abstract

This study examines the impact of economic development, trade openness, and energy usage on Vietnam's CO2 emissions from 1985 to 2013 by applying an Auto-regression Distributed Lag (ARDL) model. The empirical results show a long-run relationship between economic development and CO2 emissions in Vietnam that can be expressed in an inverted U-curved function. Trade liberalization exhibits a positive impact on CO2 emissions, as a 1% increase in trade openness leads to a 0.191% increase in CO2 emissions for long-run elasticity. Furthermore, trade liberalisation has lag effects on CO2 emissions, which are estimated to reverse from negative to positive after a two year period. A 1% increase in energy usage leads to a 1.391% increase in CO2 emissions for long-run elasticity. Thus, environmental quality improves with cleaner technology and stricter regulations on environmental protection incorporated into international economics at the policy level in Vietnam.

Keywords：Trade openness, Energy consumption, CO2 emissions, Auto-regression distributed lag model, Vietnam.

JEL Classifications：C32, F15, F18, O53, Q56.

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