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MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY OPEN UNIVERSITY BUI HOANG NGOC ECONOMIC INTEGRATION, ENERGY CONSUMPTION AND ECONOMIC GROWTH A DISSERTATION PRESENTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN ECONOMICS Ho Chi Minh City, 2020 CHAPTER INTRODUCTION 1.1 Research context and rationale of the study The relationship between economic integration and economic growth attracted the particular interest of managers and researchers The appeal of accurate identification and analysis of this relationship is located in the right place to determine the type of economic integration that the country should prioritize the development and speed of production/power supply must correspond to the economic growth rate Currently, the domestic and international context puts Vietnam's economy in front of many opportunities and many challenges The integration will encourage export, financial freedom, strengthen the transfer of technological advances, but integration also increases the risk of disease, crime, complicated political situation, national security So the first question in which countries to answer is, should integration in what field: economic integration, political-military integration, or social integration? On energy consumption, the current price of these types of energy tends to boom and is hard to predict Since the "oil shock" in the period 1970-1980, the price of all energy is continuously increasing globally and increasingly difficult to predict For countries where these energies are unavailable, understanding the relationship between energy consumption and economic growth will enable impact analysis, the importance of each type of energy, and a strategic formulation to select or search for alternative types of energy This trend becomes more pronounced in developed countries such as the EU region, where people not accept the ineffective energy policies that the Government is enforcing "The price to pay" for economic growth is not only the depletion of energy/resources but also an increasingly complex climate change, which is at risk of a threat to sustainable development in most countries of the World Therefore, the study of the relationship between integration, energy consumption and economic growth is not only scientifically meaningful, but it also provides additional empirical evidence to help developing countries (including Viet Nam) identify Density and a tendency to contribute to each element of integration and energy consumption into the gross domestic product Thus, the planning of integration strategies and energy security to suit the point, scale, and economic growth of the nation itself 1.2 Research objectives (i) To analyze the relationship between energy consumption and economic growth in the case of Vietnam (ii) To analyze the relationship between economic integration and economic growth in Vietnam (iii) To analyze the impact of economic integration and energy consumption on economic growth both in the short and long term 1.3 Research question ▪ How does energy consumption impact on economic growth in Vietnam? ▪ How does economic integration impact on economic growth in Vietnam? ▪ How energy consumption and economic integration impact on economic growth both in the short and long term? 1.4 Scope of research Scope of content: The thesis study on the impact of economic integration, energy consumption on Vietnam's economic growth Time of research: From 1971 to 2018 Research subject: Vietnam 1.5 The empirical contribution of the study This research helps the system pre-scientific theories on economic integration and energy consumption The experimental results of the study will provide empirical evidence to propose policies for energy security strategy planning, diversity of energy sources, as well as the choice of the type of economic integration that brings many benefits to people/businesses, maintain stable/sustainable economic growth The study can be a reference for the researcher, student, or case study, and contributing to the volume of scientific articles published in international journals for Vietnam 1.6 The theoretical contribution of the study By applying the Autoregressive Distributed Lag (ARDL) approach purposed by Pesaran et al., (2001), the Nonlinear Autoregressive Distributed Lag (NARDL) purposed by Shin et al., (2014), and the Toda & Yamamoto (1995) test, the dissertation find the statistical evidence to conclude that: • Firstly: There is a positive impact of financial integration, trade integration on economic growth in the case of Vietnam Besides, the dissertation confirmed that the rate of inflation should control the impact of financial integration and openness on growth It contributed to new knowledge in the economic literature • Secondly: The dissertation showed that the contribution of electricity consumption to economic growth is different from 1971 to 2017 In particular, the contribution of electricity consumption in the period of 19711994 is higher than the period of 1995-2017 (implied that there is a "structural breakpoint" in Vietnam's data) No previous studies analyzed the "structural breakpoint" in the case of Vietnam • Thirdly: The dissertation found that the impact of petroleum consumption on growth is nonlinear and asymmetry effect Accordingly, the effect of increasing petroleum consumption to economic growth would be different from the effects of reducing petroleum consumption No previous studies analyzed the asymmetry impact in the case of Vietnam • Fourthly: The study of individual impacts of each type of economic integration (global integration, financial integration, trade integration), or each form of energy consumption (electricity consumption, petroleum consumption) impacts economic growth notwithstanding scientific significance, but it is easy to provide a visual overview The dissertation analyzes at the same time all three forms of integration and two forms of energy consumption, which helps policymakers plan to increase investment in the electricity sector, explore new sources of energy, and suitable integration strategy to achieve sustainable economic development It is the new experimental point of the dissertation 1.7 Structure of the dissertation The dissertation is presented in chapter Chapter 1: Overview of the study; Chapter 2: Literature review and analyze the previous empirical studies; Chapter 3: Research model, data and methodology; Chapter 4: Empirical results and discussion; Chapter 5: Conclusion, implications, and limitations of the subject CHAPTER LITERATURE REVIEW AND THE ANALYZE OF THE PREVIOUS EMPIRICAL STUDIES 2.1 Concept of economic growth, economic integration, and energy consumption Thirlwall (1994) "Economic growth is an increase in the average income or yield that is calculated for the entire economy over a certain time, usually one year." Nguyen Quoc Tru (2010) "Integration is the process in which countries conduct strengthening activities that strengthen them together based on the sharing of interests, objectives, values, resources, rights lực_thẩm the right to dispose of policies and to comply with the general play laws within the framework of institutional or international organizations." Balassa (1961, 1994) "Economic integration is the process of gradually eliminating discrimination in an area." According to the International Energy Agency, "Energy consumption is the volume of energy that is used in a process or a system by an organization or individual for various purposes over a certain time." 2.2 A summary of previous studies on the relationship between economic integration and economic growth In the study, global integration, financial integration, and trade integration were three proxy variables that presented economic integration The summary of previous studies in the relationship between economic integration and economic growth is presented in the next paragraph, as follow: The relationship between global integration and economic growth The KOF globalization index was proposed by Dreher (2006) The KOF Globalisation Index measures the economic, social, and political dimensions of globalization It is used to monitor changes in the levels of globalization of different countries over a long period Dreher (2006) used the KOF Globalization index to analyze the impact of economic integration on economic growth for 123 countries in the period of 1970-2000 By applying the Ordinary Least Square approach and the Generalized Method of Moments approach, he found that economic globalization and social globalization have a positive impact on economic growth, but no relationship between political globalization and growth Earlier, Frankel (2000) found that there are two main reasons to encourage integration: i) it helps to reduce the shipping and information costs, ii) it helps to reduce trade and investment barriers Suci et al (2015) used the KOF Globalization index to analyze the impact of integration on growth for six Asian countries in the period from 2006-2012 The study concluded that economic integration and policy integration has a positive impact on economic growth in these countries However, there is not a relationship between social integration and growth Neagu (2017) found that there is a negative impact of social integration on Romania's economic growth in the period of 1990-2013 At the same time, Neagu also affirmed that there is a bidirectional causality running from economic integration, policy integration to Romania's economic growth The number of previous studies in economic integration is very few, in the case of Vietnam Pham Lan Huong (2013) found that integration has a positive impact on Vietnam's structure economy Accordingly, education and the ability of enterprises play an essential role in successful integration Tran Tho Dat and Nguyen Thi Cam Van (2017) using the KOF globalization index in the period from 1995-2014 for Vietnam's economy, finding statistical evidence to conclude Vietnam should enter deep and full integration into the World Economic integration helps attract foreign direct investment and improve the deficit of trade balance In general, there are a few previous studies on the impact of the global integration of economic growth Although each study analyzed one type of integration, the conclusions of the studies were similar Most of the previous studies confirmed that global integration has a positive impact on economic growth So, the dissertation assumed that economic integration would be a positive impact on economic growth in the case of Vietnam The relationship between financial integration and economic growth The relationship between financial integration and economic growth has been well-known However, the conclusion of the empirical studies is not consistent, even directly debating Group 1: Group advocate financial integration Acemoglu and Zilibotti (1997), Edison et al (2002a) are the authors who supported on financial integration They believe that international financial integration will facilitate risk sharing, expanding market-consuming, forming global supply chains, thereby enhancing the specialization of production, allocation of capital, and increasing the economic growth rate Also, international financial integration will improve the operation of the domestic financial system through enhanced competitiveness and the development of financial services Integration also promotes economic growth by helping businesses reduce input costs (the rate of borrow interest), increasing profits, and encouraging domestic investments The studies of Bonfiglioli (2008), Altomonte and Nicolini (2012) showed that domestic businesses have to engage and compete with multinational enterprises; they must improve competitiveness and improve productivity The research of Bauer et al (2014) confirmed that domestic enterprises would restructure the cost and tax obligations Dreger and Zhang (2014), Samina et al (2019) also said that developing nations should be integrated to receive high technological machines from developed countries The study of Lawal et al (2016), Saucier and Rana (2017); Boglioni (2018); Danlami et al (2018) were found when a country integrated into a worldwide; this country can be received various advantages as improving the trade balance, expanding the market and take part in international supply chains Financial integration will boost startup activities is the conclusion of Coulibaly et al (2018) Group 2: Group not advocate financial integration Lucas (1990) discovered a paradox (labeled is Lucas paradox) In the theory of literature economic, the flow of capital must shift from the United States (the rich capital) to India (the poor capital) However, the actual situation oppositely took place, which means the capital flows from India to the United States To explain the paradox, Lucas (1990) believes that international capital does not flow to the undeveloped countries due to which human capital and institutional quality are low The market is not perfect, and there is a lot of other risks that come from developing nations that not comply with its obligations and may sever the relationship with Investors The finding of Lucas has promoted the group from advocating financial integration Boyd and Smith (1992) stated that international financial integration in weak institutional countries could lead to an amount of capital going out, from the domestic to better institutional countries Physical domestic capital should be scarce Rodrik (1998), Edwards (2001), Okada (2013) also said that high international financial integration pushed emerging economies into a recession, the benefits are less while the negative impacts are challenging to control Emerging markets can be more financially institutional, so it is highly susceptible to the volatility of the global financial market, which is especially severe for countries with an open capital account Rahman and Shahari (2017), Vinh and Phong (2017), Trang and Kieu (2015) said that financial integration would not be the same between developed countries and developing countries due to countries have a different trade policy and amounts of exchange reserves With a little reserve, developing countries often slow/weak response to the "economic shocks" or recession Group 3: Opposing groups and conditional groups Edwards (2001) found that international capital flows will impact negative economic growth in developed countries, but the positive impact on economic growth in developing countries However, Arteta et al (2001), Edison et al (2002b) state that the empirical results of Edwards were not reliable because it does not satisfy the stability test In other studies, Quinn (1997) concluded that financial integration has a positive impact on economic growth, but Kraay (1998), Arteta et al (2001) confirmed that the result of Quinn (1997) was not reliable Some studies have shown that the impact of financial integration on economic growth only takes place under certain conditions According to Bashar and Khan (2007), financial integration has a positive effect on growth when the country accumulates excellent human capital resources Batuo et al (2018), Pradhan et al (2018) believe that financial integration is only suitable for countries with an extensive financial system and technology Finally, the study of Ngo Hoang Trang and Nguyen Thi Diem Kieu (2015) said that financial integration is only suitable for countries with large amounts of exchange reserves The relationship between trade integration and economic growth The relationship between trade integration and economic growth has also been the many debates topic by the Economist Disagreement is demonstrated in both theoretical and empirical results Baldwin and Seghezza (1996) said that trade integration helped attract more capital for non-commercial areas The domestic goods will be cheaper and of higher quality Trade integration reduces the price of the imported machinery or material raw, which leads to a reduction in the business cost for enterprises Romer (1989), Danlami et al (2018), Ma et al (2019) showed that trade integration could also impact economic growth through improved technology due to the horizontal and longitudinal technological spreads in the same supply chain or between global product supply chains together Economic benefits at the scale of research and development activities will be transferred gradually in the process of investment reception, and interdependent in meeting the needs of customers Frankel and Cavallo (2008) claim that economies with sizeable commercial integration often have to adjust the reduction of real rates to balance the current account, so the negative consequence of lowering the price of the coin is less severe, resulting in that country being less likely to break down Besides, trade integration also helps countries less vulnerable to negative implications of financial integration when capital flows suddenly stop or fall into the financial crisis Trade integration helps to pay the external debt and avoid recession However, no relationship between trade integration and economic growth is the conclusion of Musila and Yiheyis (2015) in the case of Kenya Bolaky and Freund (2004) said that the magnitude of trade integration would be more reliable in better institutional countries Besides, there is a significant concern that developed countries often play a dominant role in international trade and investment organizations such as WTO, IMF Some policies or regulations issued by WTO, IMF have often brought many benefits to developed countries 2.3 A summary of previous studies on the relationship between energy consumption and economic growth Over the past four decades, the relationship between energy consumption and economic growth was an interesting topic for researchers and policymakers Energy production is the spearhead industry in many countries Moreover, energy impacts both the total supply and the total demand in the economy The directions that 2.4 Research hypothesis To conclude theoretical and experimental studies, combined with the management of economic integration and energy consumption in Vietnam, the thesis states that the following research theories: Hypothesis H1: Global integration has a positive impact on economic growth Hypothesis H2: Financial integration has a positive impact on economic growth Hypothesis H3: Trade integration has a positive impact on economic growth Hypothesis H4: Energy consumption has a positive impact on economic growth Hypothesis H5: The impact of energy consumption on economic growth is constant Hypothesis H6: The impact of energy consumption on economic growth is the symmetrical impact 2.5 Research gaps In summary of experimental studies, the thesis found there were several research flaws such as the following: Firstly: Previous studies only analyze the individual impacts of each type of economic integration to economic growth The analysis provides an incomplete view of all the impacts of economic integration Most developing countries (inclusive Vietnam) are simultaneously participating in three forms of integration: Global integration, financial integration, and trade integration Secondly: Previous studies are based on a fundamental assumption that the impact of energy consumption on growth is constant in all periods Many factors dominate economic activities Thus, corresponding to each period is the scale of the economy, each method of operation of different material production, i.e., economic growth, or economic integration will be coordinated by the "threshold effect" of the institutional quality or the rate of inflation level Thirdly: In addition to ignoring the threshold effect, previous studies for the Vietnamese economy are based on the assumption that data not existent a "structural breakpoints" In 1986-2018, Vietnam had two essential milestones in economic integration: (i) In 1995, the United States banned economic sanctions, and Vietnam was being joined as a member of the Association of Southeast Asian Nations; (ii) In 2008, Vietnam is an official member of the World Trade Organisation Two events may be the reason for believing that the assumption (not existent the structural breakpoint) is yet to be reasonably Fourthly: Previous studies are based on the assumption that the impact of energy consumption on economic growth is the symmetrical impact That means the increasing energy consumption and reducing energy consumption will impact economic growth is the same The assumption may not be practical because Vietnam and the world economy have against some crises in the period 1971-2017 Furthermore, high technology makes the machinery less energy-consuming, so the contribution of energy consumption into economic growth tends to diminish CHAPTER 3: RESEARCH DESIGN 3.1 Research directions of the thesis The dissertation was be divided into three directional research, as follow: Economic integration 1 3 Economic growth Energy consumption Detail: Direction 1: The direction is designed to investigate the impact of economic integration on economic growth both in the short term and long term Direction 2: The direction is designed to investigate the impact of energy consumption on economic growth both in the short term and long term Direction 3: The direction is designed to investigate the impact of economic integration, and energy consumption on economic growth both in the short term and long term 3.2 The research model for direction LnGDPt =  + 1 X t +  UBt + ut (Eq 1) LnGDPt =  + 1 X t +  DTt + 3 ( X t DTt ) +  UBt + ut (Eq 2) Notes: UB is the rate of urbanization; it plays the role of the control variable ut is the error Xt is global integration (labeled KOF), financial integration (labeled IFI), or trade integration (labeled OPEN) DT is a dummy variable (before "structural breakpoint" is 0, after "structural breakpoint" is 1) Annual data are collected from 1986 to 2018 "Ln" is the logarithm 3.3 The research model for direction GDPt =  + 1 X t +  DTt + 3 ( X t DTt ) +  UBt + ut (Mơ hình 3) GDPt =  + 1.ECcapitat +  Oilcapitat + 3 UBt + ut (Mơ hình 4) Notes: Notes: UB is the rate of urbanization; it plays the role of the control variable ut is the error In Eq 3, Xt is the average petroleum consumption per capita Oilcapita (to analyze the impact of petroleum consumption on growth), Xt is the average electricity consumption per capita (to analyze the impact of electricity consumption on growth) DT is a dummy variable (before "structural breakpoint" is 0, after "structural breakpoint" is 1) Annual data are collected from 1971 to 2017 3.4 The research model for direction LnGDPt = 0 + 1.LnIFI t +  LnECt + 3 UBt + ut (Eq 5) Note: Notes: UB is the rate of urbanization; it plays the role of the control variable ut is the error The LnIFI variable is the logarithm of financial integration, and the LnEC variable is the logarithm of electricity consumption per capita Annual data are collected from 1986 to 2017 3.5 Sources of data Annual data for economic growth are collected from the World Bank (WB), International Energy Agency (IEA), United Nations Conference on Trade and Development (UNCTAD), and Swiss Economics Studies 3.6 Methodology The dissertation applies some econometric technical approach, as follows: The Ordinary Least Square regression (OLS), Threshold regression (TR), Autoregressive Distributed Lag (ARDL) approach, Nonlinear Autoregressive Distributed Lag (NARDL) approach, and the Toda and Yamamoto (1995) causality test CHAPTER 4: EMPIRICAL RESULTS AND DISCUSSION 4.1 A brief of economic growth, integration, and energy consumption in Vietnam in the period of 1971-2018 Regarding economic integration, according to the Vietnam Chamber of Commerce and Industry (VCCI) after the economic innovation in 1986, Vietnam's economy has gradually entered into the regional/world economy In 1995, Vietnam was being joined as an official member of the Association of Southeast Asian Nations In 2008, Vietnam was an official member of the World Trade Organization (WTO) By March 05/2019, Vietnam has signed 12 bilateral and multimodal free trade agreements, which are negotiating four agreements One hundred twenty-six countries/territories have foreign direct investment projects in Vietnam, and Vietnam has trade relations with about 178 countries/territories around the World Economic integration is being given the support of Government and administrator in Vietnam Regarding energy consumption, the increase in economic growth leads to an increase in energy consumption However, electricity consumption per capita is too high To make unit of products, Vietnam has to spend power output almost three times more than the Chinese and Asian countries Vietnam has been negatively affected by the regional economic crises of Asian in 1997 and the World in 2008, but the economy is still growing drastically throughout the 1986-2018 period, with many positive transitions in quantity and quality According to the World Bank, income per capita has increased by nearly six times, from 391 (USD/person/year) in 1986 to 1.965 (USD/person/year) in 2018 (at a fixed price in 2010) Vietnam is ranked as a developing country since 2012 4.2 The empirical result of direction Table The impact of integration on growth in the long term Variables Coefficient Std.Error P-value -0,0147 0,0220 0,513 1,1953 0,8458 0,177 -0,0245 0,0217 0,274 UB 0,1449 0,0650 0,041 Intercept 0,4259 0,2894 0,161 LnIFI 0,1059 0,0345 0,008 DT 3,3715 1,1336 0,009 -0,3458 0,1201 0,011 UB 0,1207 0,0219 0,000 Intercept 0,4859 0,2419 0,063 OPEN 0,0248 0,0078 0,006 DT 1,5102 0,5274 0,013 KOF DT KOF_DT LnIFI_DT OPEN_DT -0,0203 0,0074 0,016 UB 0,0402 0,0092 0,001 Intercept 0,8994 0,2097 0,001 The result in table showed that global integration (KOF variable) harm growth, but not yet significant The financial integration and trade integration has a positive impact on economic growth at a 1% level significant The LnIFI_DT variable and the OPEN_DT variable have a negative impact That means both of the financial integration, and trade integration will boost economic growth in the case of Vietnam However, the size of the impact trend to diminish after 1995 (there is a "breakpoint" in 1995) 4.3 The empirical result of direction Table The impact of energy consumption on growth in the long term The result of electricity consumption by ARDL approach Variables Coefficient Std.Error P-value ECcapita 0,9904 0,2098 0,000 DT 110,74 26,935 0,000 -0,9178 0,1976 0,000 81,440 5,1313 0,000 -625,45 137,70 0,000 EC_DT UB Intercept The result of electricity consumption by NARDL approach ECcapita_POS 0,1024 0,0291 0,001 ECcapita_NEG -6,9053 3,5553 0,061 The result of petroleum consumption by ARDL approach Oilcapita -267,97 166,16 0,115 DT -4,1862 75,667 0,956 Oil_DT 61,937 175,27 0,726 UB 137,03 27,523 0,000 Intercept -322,29 97,904 0,002 The result of petroleum consumption by NARDL approach Oilcapita_POS 114,265 46,809 0,020 Oilcapita_NEG -58,943 19,878 0,006 Table showed that the impact of electricity consumption on economic growth is a positive and asymmetrical impact by both of ARDL and NARDL approach Petroleum consumption has a positive impact on growth in the long term The impact of petroleum consumption is also asymmetry Accordingly, the impact of increasing petroleum on growth is stronger than decreasing petroleum 4.4 The empirical result of direction Table 3: The impact of integration and energy consumption on growth Variables Coefficient Std.Error P-value The empirical result by OLS regression LnIFI 0,0205 0,0030 0,000 LnEC 0,3725 0,0243 0,000 UB 0,0115 0,0047 0,020 Intercept 4,1671 0,0318 0,000 LnIFI 0,0283 0,0123 0,035 LnEC 0,2219 0,0718 0,007 UB 0,0283 0,0106 0,017 Intercept 1,8936 0,6860 0,014 The empirical result by ARDL approach R_square = 0,87, Adj R_square = 0,78 ECM = LnGDP - [0,0283.LnIFI + 0,2219.LnEC + 0,0283.UB + 1,8936] The results in table showed that both economic integration and energy consumption have a positive impact on economic growth in the case of Vietnam over the period 1986-2017 4.5 Discussion Discussion to the relationship between economic integration and economic growth The conclusion of this study advocated for all three hypotheses H1, H2, H3 Accordingly, the overview of the integration has a positive impact in the short term, while the financial integration, trade integration has a positive impact on economic growth in Vietnam Comparing this conclusion to previous studies also exists several different points, as follows: About global integration: The dissertation concludes that global integration has a positive impact on economic growth in the short-term This conclusion conciliated with the conclusion of Dreher (2006), Suci et al (2015), Tran Tho Dat and Nguyen Thi Cam Van (2017) The practice shows that Vietnam has a significant transformation since 1995 when Vietnam was a member of ASEAN Focusing on three pillars of cooperation: economic cooperation, cooperation on national security, and cultural cooperation ASEAN has been ranked as the most dynamic economic region for about the past two decades by the United Nations About financial integration: The dissertation concludes that financial integration has a positive impact on economic growth both in the short term and long term This conclusion is similar to the study of Zhang and Matthews (2019), Ghosh (2019), Vinh and Phong (2017) for Asian countries, the study of Danlami et al (2018) for the Nigeria economy, the study of Rahman and Shahari (2017) for Asian+3 countries But again, the conclusion of Vo Xuan Vinh and Duong Hoai Anh (2017), the study of Musila and Yiheyis (2015) for the Kenyan economy in the period 19822009 The author argues that the dissertation is consistent with the socio-economic practices of Vietnam because Vietnam is the following developed country It is necessary to make the most of the advantages of geographical location, natural resources, and the trend of capital and technology movement of the World Thanks to the economic integration, Viet Nam has consistently sustained political stability, income per capita is improved, the rate of growth is always higher than 5% per year, attracting foreign direct investment is always greater than 10 billion per year during the period from 2008 to present, despite the overwhelming impact from the global financial crisis of 2008 About trade integration: The dissertation concludes that trade integration has a positive impact on economic growth both in the short term and long term This conclusion was similar to the study of Deluna and Chelly (2014) for the Philippine economy from 1980 to 2011, or the study of Belloumi (2014), Destek (2015), Gokmenoglu et al (2015), Guei and Le Roux (2019), Haider and Adil (2019) According to Krugman (1988), developing countries with lower production costs (because of the lower labor cost), commodities are competitive when exported Discussion on the relationship between energy consumption and economic growth The overall conclusion of this empirical study is that energy consumption will help promote economic growth in the case of Vietnam Thus, the empirical results affirmed that the H4, H5 hypothesis, and rejected the H6 hypothesis According to Rostow (1990), the conclusion of the study was similar to the many conclusions of other studies for other countries/regions with the same point and conditions similar to the Vietnamese as the study of Foon Tang (2009) for the Malaysian economy in the period 1970-2005, Ghosh (2009) for Indian economy in the period 1975-2008, the study of Odhiambo (2009b) for Tanzania from 1971-2006 or Ibrahiem (2015) for Egyptian economy The conclusion is suitable for Vietnam due to Vietnam is ranked as a developing country by the World Bank As a result, energy is a primary resource/input factor for all economic activities The performance due to reasonable energy use not only implies the cost savings of production costs but also helps to improve profitability through enhanced labor productivity Stern (1993, 2000), Apergis and Payne (2009) also argued that "Even if the scarcity of energy is not able to conclude, it is more efficient to use existing energy to increase the wealth of the country." CHAPTER 5: CONCLUSION AND POLICY IMPLICATIONS 5.1 Conclusion Today, the achievement of Vietnam's economy is formed from the way of innovation, bilateral integration, multimodal with the World With data from 19712018, by applying the ARDL approach purposed by Pesaran et al (2001) proposed, the NARDL approach purposed by Shin et al (2014), and the Toda and Yamamoto (1995) causality test, the dissertation finds evidence to conclude that: Firstly: Financial integration and trade integration have a positive impact on economic growth both in the short term and long term Secondly: There is statistical evidence to conclude that the impact of electricity consumption on economic growth is a positive impact both in the shortterm and long-term However, this impact is the asymmetrical impact in the long term, and the contribution of electricity consumption to economic growth in the period after 1995 will be lower than the period before 1995 Thirdly: Petroleum consumption has a positive impact on economic growth, and it is an asymmetrical impact in the long term Increasing the consumption of petroleum will impact economic growth more strongly than reducing petroleum consumption Fourthly: There is statistical evidence to conclude that the rate of urbanization has a positive impact on economic growth in Vietnam both in the short term and long term 5.2 Policy implications From the empirical results of the dissertation, the author recommends several notes when applying this result to the following practices: Firstly: Governments/enterprises need to strive for economic integration and integration in various fields The empirical results of this study show that when integration, both global integration, financial integration, and trade integration contribute positively to economic growth The expansion of exchanges, looking for opportunities for business cooperation with other countries/regions, is also a way to restrict negative influences (if any) Secondly: At the same time, with the maintenance of economic growth, the rate of inflation should be stabilized by the Government The impact of financial integration, trade integration only have a positive impact on economic growth when the rate of inflation was being controlled Thirdly: Although economic integration has a positive impact when foreign direct investment capital flows into Vietnam also causes other negative impacts such as exhaustion of natural resources, polluting the environment (air pollution, soil contamination, water pollution, noise pollution), impede the development of domestic enterprises Consequently, the Government needs to issue the standards for choosing the right foreign direct investment projects while calling for the reflection and oversight of foreign direct investment projects from the local Government, enterprises, and people Fourthly: Energy consumption, including electricity consumption and petroleum consumption, has a positive impact on economic growth Consequently, the Government needs to calculate and invest in the development of the electricity sector corresponding to the economic growth rate A deficiency or deviation in energy development (if any) reduces the rate of economic growth of Vietnam Fifthly: Electricity consumption helps economic growth, which does not mean that Vietnam has to build many power plants It was using smart electrical equipment (auto on/off), shutting down unnecessary equipment, reducing the loss in power transmission It is also a way for Vietnam to increase power output for the country Sixthly: Although petroleum consumption has the effect of promoting economic growth, the consumption of petroleum is also the source of the greenhouse that threatens directly to the health of the people The favorable geographical position of Vietnam has many potentials to develop alternative energy for petroleum, such as solar, wind energy, renewable energy, geothermal energy These are more environmentally friendly energy Exploiting and converting to these energies is of utmost importance to socio-economic, energy security, and sustainable development Seventhly: The percentage of urbanism has a positive impact on economic growth that is not synonymous with Vietnam in any way to accelerate the level of urbanism The economic activity requires the conditions of facilities, so the Government should focus on investing in transportation infrastructure, information technology, human resource training, Port building/renovation, airport More than encouraging people to focus on the major urban 5.3 The new finding of the dissertation The empirical result of the dissertation contributed some new knowledge on the economic literature and the practice, as follows: • Firstly: There is a positive impact of financial integration, trade integration on economic growth in the case of Vietnam Besides, the dissertation confirmed that the rate of inflation should control the impact of financial integration and openness on growth It contributed to new knowledge in the economic literature • Secondly: The dissertation showed that the contribution of electricity consumption to economic growth is different from 1971 to 2017 In particular, the contribution of electricity consumption in the period of 19711994 is higher than the period of 1995-2017 (implied that there is a "structural breakpoint" in Vietnam's data) No previous studies analyzed the "structural breakpoint" in the case of Vietnam • Thirdly: The dissertation found that the impact of petroleum consumption on growth is nonlinear and asymmetry effect Accordingly, the effect of increasing petroleum consumption to economic growth would be different from the effects of reducing petroleum consumption No previous studies analyzed the asymmetry impact in the case of Vietnam • Fourthly: The study of individual impacts of each type of economic integration (global integration, financial integration, trade integration), or each form of energy consumption (electricity consumption, petroleum consumption) impacts economic growth notwithstanding scientific significance, but it is easy to provide a visual overview The dissertation analyzes at the same time all three forms of integration and two forms of energy consumption, which helps policy_makers plan to increase investment in the electricity sector, explore new sources of energy, and suitable integration strategy to achieve sustainable economic development It is the new experimental point of the dissertation 5.4 The limitations and future orientation In the dissertation, the author has not yet added control variables that illustrate the amount of traffic, the price of energy, institutional quality, geographical location (e.g., winter cold, summer hot is the reasons why Vietnam's electricity consumption was too high) Besides, the dissertation has also not considered the structural economy to influence energy consumption due to the industrial sector also requires and uses a large volume of energy compared to other regions It is an open suggestion for future research to analyze the relationship between economic integration and energy consumption in Vietnam 5.5 • List of publications related to the dissertation Ha, N.M., & Ngoc, B.H (2020) Energy consumption and Economic growth nexus in Vietnam: An ARDL approach with a structural break Journal of Asian Finance, Economic and Business, vol.7(1), 101-110 • Ha, N.M., Ngoc, B.H., Duc, V.H., & McAleer, M (2019) Energy consumption and economic growth: Evidence from Vietnam Journal of Reviews on Global Economics, vol.8, 350-361 • Ha, N.M., Ngoc, B.H., & Duc, V.H (2019) The nexus between Economic Integration and Growth: Application to Vietnam Annals of Financial Economics, vol 14(3), 1950014 • Long, P.D., Ngoc, B.H., & My, D.T.H (2018) The Relationship between Foreign Direct Investment, Electricity Consumption and Economic Growth in Vietnam, International Journal of Energy Economics and Policy, vol.8(3), 267-274 • Bui Hoang Ngoc & Vuong Duc Hoang Quan (2018) The relationship between electricity consumption and economic growth nexus in Vietnam Journal of Economics and Development Studies, vol 248(2), pp 12-22 (in Vietnamese) The dissertation was completed at: HO CHI MINH CITY OPEN UNIVERSITY Academic advisors: Assoc.Prof Nguyen Minh Ha, Ph.D Reviewer 1:…………………………………………………………… Reviewer 2:…………………………………………………………… Reviewer 2:…………………………………………………………… This dissertation will be presented at the dissertation committee at Ho Chi Minh City Open University Ho Chi Minh City, at ………………………………………, 2020 This dissertation can be found at: ……………………………………………… ... research model for direction LnGDPt =  + 1 X t +  UBt + ut (Eq 1) LnGDPt =  + 1 X t +  DTt + 3 ( X t DTt ) +  UBt + ut (Eq 2) Notes: UB is the rate of urbanization; it plays the role of the... to 2018 "Ln" is the logarithm 3.3 The research model for direction GDPt =  + 1 X t +  DTt + 3 ( X t DTt ) +  UBt + ut (Mơ hình 3) GDPt =  + 1.ECcapitat +  Oilcapitat + 3 UBt + ut (Mơ hình... consistent, even directly debating Group 1: Group advocate financial integration Acemoglu and Zilibotti (1997), Edison et al (2002a) are the authors who supported on financial integration They believe