THE RELATIONSHIP AMONG FOREIGN DIRECT INVESTMENT, GROWTH, AND ENVIRONMENTAL QUALITY: IS VALID "RACE TO THE BOTTOM" IN TURKEY?


ÜZAR U.

JOURNAL OF MEHMET AKIF ERSOY UNIVERSITY ECONOMICS AND ADMINISTRATIVE SCIENCES FACULTY, vol.6, no.2, pp.439-451, 2019 (Journal Indexed in ESCI) identifier

  • Publication Type: Article / Article
  • Volume: 6 Issue: 2
  • Publication Date: 2019
  • Doi Number: 10.30798/makuiibf.531931
  • Title of Journal : JOURNAL OF MEHMET AKIF ERSOY UNIVERSITY ECONOMICS AND ADMINISTRATIVE SCIENCES FACULTY
  • Page Numbers: pp.439-451
  • Keywords: Foreign Direct Investment, Economic Growth, Carbon Dioxide Emission, Race to the Bottom, ARDL Model, POLLUTION HAVEN HYPOTHESIS, ECONOMIC-GROWTH, FINANCIAL DEVELOPMENT, KUZNETS CURVE, CARBON EMISSIONS, CO2 EMISSIONS, TIME-SERIES, TRADE, INCOME, CONSUMPTION

Abstract

The aim of this study is to examine the relationship between direct foreign investment inflow and carbon dioxide emission, using race to the bottom methodology in Turkey during 1970-2014. An Autoregressive Distributed Lag Model (ARDL) test is employed to determine possible long-term and short-term nexus among series. ARDL test results show that the series are cointegrarated. The long-term coefficients obtained from the ARDL model indicate that economic growth, gross fixed capital formation, and trade openness have positive effect on carbon dioxide emissions, while foreign direct investment does not have a significant effect on carbon dioxide emission as environmental quality. According to findings, both race to the bottom and pollution haven hypothesis are not valid for Turkey, while Environmental Kuznets Curve (EKC) is valid. Thus, Turkey's foreign direct investment policies should be directed to information technology, research and development, green technology, and renewable energy. These developments will facilitate both the transition to high value-added production and the realization of energy efficiency. Thereby, Turkey will obtain significant macroeconomic and environmental gains.