[Podcast] The relationship among green credit, CO2 emissions and high-quality green economic development: One case study in Vietnam
7 September, 2024
Key words: green credit, green finance, high-quality green economic development, CO2 emission intensity, sustainable growth
Before the COVID-19 pandemic, the transition towards a resilient, sustainable green economy was set as a key goal in protecting the environment and ensuring sustainable development. When the COVID-19 pandemic struck, the fact that economies across the globe were vulnerable to the challenges of the current situation made us realize that ensuring the sustainability of the environmental, the resources and the economics is extremely necessary. From this reality, the author group of University of Economics Ho Chi Minh City (UEH) has embarked on the study “The relationship among green credit, CO2 emissions and high-quality green economic development: One case study in Vietnam”.

Green credit and high-quality green economic development
In developing countries like Vietnam, high-quality green economic growth has great practical significance and needs great attention. Most of the existing researches in Vietnam and around the world mainly focus on high-quality economic development while the number of studies on high-quality green economic development has been very limited. During the transition to a green economy, it is necessary to change the current economic system to minimize negative impacts on the environment and the natural resources while promoting sustainable economic development. This includes moving away from fossil fuel energy sources and towards renewable energy sources, improving resource efficiency and promoting sustainable consumption and production patterns. In Vietnam, transitioning to a green economy brings many benefits listed as reducing pollution and greenhouse gas emissions, improving public health, creating new job opportunities and promoting sustainable economic growth. On the other hand, this requires overcoming significant challenges, including inadequate policies and regulations, insufficient public awareness and limited financial resources. Therefore, it is important to invest in research and development of green technologies, to promote public awareness and education, and to provide financial incentives for businesses towards implementing sustainable practices.
Green credit term is used to refer to credits or financial products that support green economic development projects or environmental protection activities. However, attracting green credit for small businesses or organizations has been difficult because the fact that the green projects are often at high risk is difficult to evaluate in terms of the financial providers. Standards and regulations related to green credit have been in the process of development and are not clearly agreed upon. Above all, if used properly, green credit will be an important source of funding for green projects in any country. In accordance with the International Energy Agency, investment in green projects will play an important role in reducing carbon emissions while helping to promote the development of green industries. To achieve high quality values in the process of developing a green economy, Vietnam needs to allocate green credit resources wisely and cautiously. Therefore, understanding and researching the connection between green credit and high-quality green economic development is essential, helping managers and investors better understand standards and regulations related to green credit while helping to increase the trust and the ability in order to attract green funding sources for green economic development projects in Vietnam.
Green credit in Vietnam Green credit is an important type of finance in terms of supporting the development of green projects to minimize negative impacts on the environment and the society while promoting sustainable development of the global economies. However, to attract green credit for green projects, small businesses or organizations often encounter various difficulties and risks. This is especially true in Vietnam, where green credit standards have not been clearly and precisely defined yet. Therefore, the study has: (1) built a high-quality green economic development index system of 63 Provinces/Cities in Vietnam in the 2015-2021 period, using the Entropy method; (2) analyzed the growth of high-quality green economy of 63 Provinces/Cities in Vietnam over the years; (3) analyzed the spatial autocorrelation of the growth of high-quality green economy of 63 Provinces/Cities in Vietnam over the years; (4) analyzed the impact of green credit and CO2 emissions on high-quality green economic development in Vietnam.
From this foundation, the research content includes the following:
– Testing the relationship between green credit, CO2 emission intensity and high-quality green economic development. To be more specific, CO2 emission intensity tends to have a negative relationship with high-quality green economic development while green credit tends to grow in the same direction.
– The calculation results regarding the Moran’s I index demonstrate that spatial autocorrelation exists in the process of high-quality green economic development in Vietnam’s Provinces in the 2015-2021 period.
– Spatial Durbin Model (SDM) regression results have proven the existence of spatial effects in the model, using the SDM model as more suitable than SAR and SEM.
Unlike the previous studies on the quality of economic development in Vietnam, this study delves into every aspect of a truly green economy. By integrating 18 indicators from four pillars (Environment, Green production, Green living standards and Social equality), the author group has thoroughly analyzed the limitations of green economic quality in Vietnam, especially in terms of the deteriorating living environment and the social justice. Unlike the previous studies that only focused on GDP and income growth rates, this study stands out by identifying the important aspects of green economic quality in Vietnam. In terms of the positive side, the author group recognize an increasing responsibility of the government, the economic entities and the citizens of Vietnam towards the goal of green and sustainable growth, especially in green production and living standards. This is clearly illustrated in the encouragement of green credit for environmentally friendly projects and economic sectors. The solid empirical evidence presented in this study demonstrates that green credit not only has a direct impact on green economic development efforts in Vietnam’s Provinces and Cities but also indirectly promotes green production and reduced carbon dioxide intensity. Another equally important contribution is the discovery of the correlation in high-quality green economic development among provinces in Vietnam as well as the spillover effects of green credit and CO2 emissions on high-quality green economic development of Provinces in Vietnam.
Policy implications regarding quality improvement of the green economy in Vietnam
In accordance with the main findings, the author group has offered some specific policy implications towards improving the quality of the green economy in Vietnam.
Firstly, policymakers need to focus on improving the living environment and the social equity because they are the basic pillars of a green economy. This can be achieved by allocating investments in green infrastructure and technology as well as implementing policies that support green living standards and promote social equality, especially in disadvantaged areas listed as the Northwest, Central Highlands and Mekong Delta.
Secondly, it is important for the government to prioritize green production and to promote environmentally friendly economic and industrial projects. To achieve this goal, the provision of green credit can be expanded and used as an effective tool to support such initiatives.
Third, policymakers must ensure that green credit criteria are in line with global standards and that the access to these credits is made more accessible to encourage businesses to invest in sustainable production. Regarding this issue, it is worth noting carbon offset projects, listed as sustainable forestry and agriculture in economically underdeveloped regions listed as the Northwest, Central Highlands and Mekong Delta; Sustainable fishing in the North Central and South Central Coasts or renewable energy, sustainable, tourism and waste management projects throughout the country, all of which could be especially advantageous.
Last but not least, the interdependence between economic, environmental and social factors emphasizes the need for Provinces to promote cooperation and to consider the interests of neighboring regions in pursuing their economic development goals. Such cooperation will help enhance the positive impacts and minimize the adverse impacts of development and ultimately push the country towards a sustainable future.
This research brings values towards Vietnam ourself from two different perspectives. First, by proposing a method to calculate the value of a high-quality green economic development index, this research helps macro-economic management agencies evaluate the current status of the green economy in Vietnam. Thanks to this information, these agencies can make appropriate policies to develop a high-quality green economy in the future. Second, this study examines the impact of green credit on high-quality green economic development. The results of this study can evaluate the importance of green credit in the transition to a green economy in Vietnam, resulting in helping managers make reasonable policies for this type of credit. This research also contributes to building a theoretical and empirical foundation for Vietnam to develop a sustainable and environmentally friendly economy.
Please refer to the full research titled The relationship among green credit, CO2 emissions and high-quality green economic development: One case study in Vietnam HERE.
Author: Assoc. Dr. Nguyen Huu Huan – University of Economics Ho Chi Minh City (UEH).
This is an article in a series of articles spreading research and applied knowledge from UEH with the message “Research Contribution For All – Research For The Community”, UEH respectfully invites dear readers to look forward the upcoming newsletter UEH Research Insights.
News and photos: Author, UEH Department of Marketing and Communications Department
Voice: Khanh Hoa

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