Vietnam's Development Trajectory: Threshold Cointegration and Causality Analysis of Energy Consumption and Economic Growth

Abstract

This study examines the relationship between per capita energy consumption and per capita GDP in Vietnam from 1976 to 2008 using threshold cointegration analysis. The findings confirm a long-term cointegration relationship between the variables, with a significant structural breakpoint in 1992, indicating a shift in the energy-growth dynamics. The results support the neoclassical view that energy consumption does not constrain economic growth, suggesting that Vietnam can implement energy conservation policies without negatively impacting its economy. The presence of a time-varying effect highlights the evolving nature of the energy-growth relationship, emphasizing the need for adaptive policy measures. A key policy implication is that the government can pursue environmentally sustainable energy-saving policies while maintaining economic expansion. The study recommends allocating energy resources efficiently to maximize productivity across various sectors. Given Vietnam’s economic growth trajectory, focusing on renewable energy sources and enhancing energy efficiency can contribute to long-term sustainability. The findings provide empirical evidence for policymakers to design strategic energy policies that balance economic growth with environmental concerns. By integrating conservation strategies with economic planning, Vietnam can ensure sustainable development while reducing energy dependency. The study adds to the ongoing debate on energy-growth linkages, offering valuable insights for emerging economies seeking to optimize energy use without compromising growth. The government should prioritize investment in energy-efficient technologies and promote sustainable energy practices to enhance economic resilience and environmental sustainability.