The relationship between crude oil prices, energy consumption, trade openness and economic growth: An empirical study on Vietnam

Abstract

In the study, the VECM was employed to evaluate the nexus between crude oil prices, energy use, trade openness, and economic growth of Vietnam between 1991 and 2020. It has been empirically found that economic growth of Vietnam was significantly and negatively influenced by crude oil prices and energy consumption in the short run. Results state that the development of trade openness may accelerate economic growth of this country. Further, the increase of crude oil prices can reduce energy consumption and trade openness of Vietnam. Trade openness can be promoted by energy consumption in the short run. In the long run, results suggest that the increase of crude oil prices may harm economic growth, while the rise of energy consumption may facilitate economic growth of Vietnam. The Johansen test demonstrates that there is a long-term relationship between crude oil prices, energy consumption, trade openness, and economic growth in Vietnam. Lastly, policies are recommended to ensure energy security, accelerate economic growth and achieve sustainable development for Vietnam.