A wavelet analysis of connectedness between economic globalization, nonrenewable, and renewable energy consumption, and CO2 emissions in Vietnam

Abstract

We examine the relationships between Foreign Direct Investment (FDI), Trade Openness (TO) and consumption of nonrenewable energy, consumption of renewable energy, and CO2 growth in Vietnam’s different time and frequency dimensions from 1985 to 2019 using cutting-edge multivariate wavelet analysis approaches. The multiple correlations indicate that two regions that were concentrated between 1985 and 1999 (cycles with a periodicity of three years). The partial coherency reveals that the interconnectedness between the TO and nonrenewable energy consumption mostly appears in the low-frequency band (the 15-to-21-year frequency band) starting from 1985 to 1999 and in high frequencies running from 1996 to 1999 and from 2004 to 2008. There are two phases of partial coherence between FDI and nonrenewable energy consumption. In the first phase (1993 to 2003), nonrenewable energy consumption was negatively associated with changes in FDI growth. In the second phase, from 2003 to 2015, the consumption of nonrenewable energy is in phase with the growth of FDI leading. There was a negative nexus between changes in FDI growth and changes in renewable energy consumption growth in the phase from 1997 to 2008. The partial phase difference reveals that the interconnectedness between FDI and CO2 emission mainly lies in the 18–25 frequency band. It appears that the phase from the beginning of our time series to 1994 indicated that changes in FDI led to changes in CO2 emissions, with the relationship being negative. Based on the partial coherence between TO and nonrenewable energy consumption, most regions fell within the 14–22-year frequency band from 1985 to 1994 and 1990 to 2006.