Abstract:

In the study, the relationships between foreign direct investment (FDI), Trade Openness (TO), economic growth and environmental pollution (CO2) were tested within the scope of the pollution haven hypothesis and the pollution halo hypothesis, using annual data for the 1993-2019 period in N-11 countries. In the study in which panel regression analysis was used, coefficients were estimated with the standard error estimator of Driscoll-Kraay (1998), which was resistant to heteroscedasticity, inter-unit correlation and autocorrelation. According to the estimation results, a 1% increase in FDI increases environmental pollution by about 0.15%, thus confirming the pollution haven hypothesis. In other words, FDI causes environmental pollution in the host country. This result also invalidates the pollution halo hypothesis. According to the other results of the study, a 1% increase in GDP increases environmental pollution by about 3.5% and a 1% increase in TO increases environmental pollution by about 0.02%.

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