Is foreign direct investment an engine for energy consumption? An empirical investigation for Turkey

ÜZAR U., Eyuboglu K.

ENVIRONMENTAL SCIENCE AND POLLUTION RESEARCH, vol.26, no.27, pp.28092-28105, 2019 (SCI-Expanded) identifier identifier identifier

  • Publication Type: Article / Article
  • Volume: 26 Issue: 27
  • Publication Date: 2019
  • Doi Number: 10.1007/s11356-019-05996-0
  • Journal Name: ENVIRONMENTAL SCIENCE AND POLLUTION RESEARCH
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.28092-28105
  • Keywords: FDI, Energy consumption, Fourier ADL, ARDL, VECM causality, Turkey, ENVIRONMENTAL KUZNETS CURVE, CARBON-DIOXIDE EMISSIONS, PANEL-DATA ANALYSIS, ECONOMIC-GROWTH, FINANCIAL DEVELOPMENT, CAUSAL RELATIONSHIP, TRADE OPENNESS, ELECTRICITY CONSUMPTION, FRESH EVIDENCE, CO2 EMISSIONS
  • Karadeniz Technical University Affiliated: Yes

Abstract

In the study, the nexus among energy consumption, foreign direct investment (FDI), economic growth, and trade openness is examined by newly developed Fourier ADL (2017) and ARDL tests cover the period 1980-2015 in Turkey. Findings indicated that energy consumption, FDI, economic growth, and trade openness are cointegrated. In addition, it is determined that an increase in economic growth and trade openness positively affects energy consumption both in the long-term and short-term but FDI has only a positive effect in the long-term. VECM causality results indicated that FDI, economic growth, and trade openness are the causes of energy consumption in the long-term. In this context, Turkish policymakers should change the composition of FDI through various incentive policies to provide energy efficiency. FDI inflows should be shifted from sectors using dirty technology to clean technologies such as the information technology and services sector. In addition, increasing FDI that included green technology and renewable energy sources may promote energy efficiency in Turkey.