Vietnam’s wind energy transition: a sectoral economic analysis

Purpose This study aims to quantify the economic impact of wind power development on local economies in Vietnam, examining sectoral variations across agriculture, industry, services and government revenues. Design/methodology/approach Using provincial data from 2017 to 2021 covering 15 provinces with commercial wind farms, this research uses the Hausman–Taylor instrumental variables estimator to address endogeneity concerns. Wind power density serves as an instrumental variable. Findings Wind power development significantly contributes to overall economic growth, generating VND 13.44 m increase in per capita gross regional domestic product for each additional 1 MW installed capacity. The impact varies substantially across sectors: industry and construction sectors benefit most significantly (0.63% increase per 1% capacity increase), while agricultural contributions remain modest and service sector impacts are negligible. State budget revenues increase by 0.26% per 1% capacity expansion. Research limitations/implications The paper uses only provincial-level data and the 2017–2021 timeframe. Future research should incorporate district-level data and longer observation periods. Social implications Results inform renewable energy policy design in developing countries, highlighting the need for balanced sectoral development strategies that maximize wind power’s economic benefits while addressing potential crowding-out effects in traditional sectors. Originality/value To the best of the authors’ knowledge, this study represents the first comprehensive econometric analysis of wind power’s sectoral economic impacts in Vietnam, providing empirical evidence for a lower-middle-income country with high wind potential using rigorous instrumental variables methodology.