Abstract:

With the global environmental sustainability at serious risk, studies on the determinants of environmental degradation become important. The effect of foreign direct investments on environmental degradation can be examined within the scope of the pollution haven hypothesis. Again, the effect of energy consumption and trade openness on environmental degradation indicators is also important in terms of forming policies for the future of countries.The main purpose of this study is to examine the impact of foreign direct investment, energy consumption and trade openness on environmental quality and the validity of the pollution haven hypothesis in Turkey. As a result of the analyses employed with the novel dynamic ARDL simulations method using annual time series data between 1970 and 2020, it has been determined that (1) increases (decreases) in foreign direct investments worsen (improve) the environmental quality and therefore the pollution haven hypothesis is valid for Turkey; (2) increases (decreases) in energy use have deteriorating (improving) effects on environmental quality; (3) increase (decrease) of trade openness affects the environmental quality positively (negatively); (4) the effect of energy use (trade openness) on environmental quality is more (less) than other variables. Finally, suggestions were made to policymakers in line with the findings.

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