Multivariate Cointegration and Causality between Electricity Consumption, Economic Growth, Foreign Direct Investment and Exports: Recent Evidence from Vietnam

Tuyen Ngoc Nguyen, Winai Wongsurawat

Abstract


This paper investigates the relationship between electricity consumption, economic growth, exports and foreign direct investment in Vietnam using time series data from 1980 to 2013. Findings will benefit investors and policy makers who must make long term plans on energy investment and regulate electricity pricing. Our results indicate that real GDP, Electricity Consumption (EC), Exports (EX) and Foreign Direct Investment (FDI) in Vietnam are cointegrated. There is unidirectional Granger causality running from real GDP to EC, EX and FDI, but not vice versa. The data also show that there is bidirectional Granger causality between EC and EX.

Keywords: Vietnam, electricity consumption; economic growth

JEL Classifications: C32, C52, Q43


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