Dynamic Interrelations Between Environmental Innovations, Human Capital, and Energy Security in Vietnam: New Evidence from an Extended QVAR Approach

Using a quantile vector autoregression (QVAR), we studied the correlations between environmental innovation, human capital, and the consumption of green and brown energy in the period 1995-2019 in Vietnam. We discovered that dynamic connectivity, approximately 57% in the near term and 19% in the long term, is affected by both the short-term and long-term research periods. The QVAR is pertinent since it tackles the problem of data shortage, with which traditional approaches may produce biased results. More notably, the advantage of our technique is that it allows us to identify transmission pathways between variables in the designed system. A dynamic net total directional connectedness across a quantile yields an overall average connectivity of 50%. This indicates a high degree of connectedness both for changes that are really positive (more than 80% quantile) and for environmental innovation, economic complexity, and renewable energy volatility (below 20% quantile). In short-duration dynamics, the role of renewable energy consumption fluctuated wildly, receiving shocks on a net basis at the start, then playing a role as a net transmitter at the end of the period. Environmental innovation is a shock receiver in short-duration dynamics but a shock emitter in long-duration dynamics. Renewable energy consumption received most of the shocks from environmental innovation prior to 2010 but subsequently became a transmitter of shocks. The presence of pairwise dynamic net directional connectivity across a quantile shows that unpredictable events such as the National Master Plan for Power Development for 2011-2020 impact environmental innovation, economic complexity, and renewable energy volatility. Our findings are critical for economists and policymakers who wish to promote a country's environmental innovation and use of green energy on the path toward sustainable development.