Abstract
This research aims to investigate the relationship between economic growth (GDP), foreign direct investment (FDI), and environmental pollution (CO2) by using Environmental Kuznets Curve (EKC) hypothesis and the pollution haven hypothesis for Vietnam. An autoregressive distributed lag (ARDL) model, Pesaran co-integration test, and Granger causality test were applied over time-series data from 1984 to 2016. The results show that the EKC hypothesis is supported in Vietnam in both the short and long term, and FDI positively impacts environmental pollution in the short term. The author also found bidirectional causality between FDI and CO2 and GDP and CO2. Relevant policy implications are proposed to reduce environmental pollution in Vietnam and to maintain FDI inflows in the future.
