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Environmental consequences of foreign direct investment influx and conventional energy consumption: evidence from dynamic ARDL simulation for Turkey

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Abstract

The preponderance of emerging economies confronts significant trade-offs between economic growth and environmental sustainability considerations, and Turkey is no exception. This study draws strength from the United Nations Sustainable Development Goals (UN-SDGs-7,11,12 & 13). To this end, the present study explores the role of the environmental Kuznets curve (EKC) hypothesis for the case of Turkey for annual frequency data from 1970 to 2020. The present study leverages on the novel dynamic autoregressive-distributed lag (DARDL) methodology and Bayer and Hanck combined cointegration test. The combined Bayer and Hanck cointegration test alongside ARDL bounds test traces equilibrium relationship between economic growth, urbanization, FDI, energy use, and CO2 emission over the investigated period. Empirical results from the DARDL simulation analysis validates the EKC hypothesis. These results suggest that environmental quality is being compromised for economic growth at the earlier stage of economic growth (scale stage). The EKC phenomenon is affirmed as a 1% increase in economic growth increase emission level by 0.1580% and quadratic economic growth decrease emission by 0.1095% in the short and long run, respectively. Similarly, urbanization and energy used in both the short and long run also worsen environmental quality while FDI influx in the long run improves environmental quality in Turkey. These outcomes have far-reaching environment-urbanization growth implications. From a policy lens, the current study subscribed to the environmental stick policies and investment on strategies on a paradigm shift from fossil-fuel energy consumption base to renewables. Further insights are highlighted in the concluding section.

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Acknowledgements

The author from King Saud University sincerely appreciates the King Saud University, Riyadh (Saudi Arabia) financial support through the Researchers Supporting Project (RSP-2021/163).

Data availability

The data for this present study are sourced from world development indicators (WDI) available at www.data.worldbank.org.

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Authors and Affiliations

  1. Mechanical Engineering Department, College of Applied Engineering, King Saud University (Al Muzahimiyah Branch), Riyadh, Saudi Arabia

    Phillips O. Agboola

  2. Department of Agricultural Finance and Banking, Bangladesh Agricultural University, Mymensingh, 2202, Bangladesh

    Md. Emran Hossain

  3. Economic and Finance Application and Research Center, İstanbul Ticaret University, Istanbul, Turkey

    Bright Akwasi Gyamfi

  4. Faculty of Economics Administrative and Social Sciences, Istanbul Gelisim University, Istanbul, Turkey

    Festus Victor Bekun

  5. Department of Economic Security, South Ural State University, 76, Lenin Aven., 454080, Chelyabinsk, Russia

    Festus Victor Bekun

  6. Faculty of Economics and Commerce, The Superior University, Lahore, Pakistan

    Festus Victor Bekun

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  1. Phillips O. Agboola
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  2. Md. Emran Hossain
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  3. Bright Akwasi Gyamfi
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  4. Festus Victor Bekun
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Contributions

Festus Victor Bekun was responsible for the conceptualization, methodology, and writing the results section. Bright Akwasi Gyamfi was responsible for formal analysis and writing the literature review section. Md. Emran Hossain managed the data curation and preliminary analysis. Phillips O. Agboola was responsible for proofreading and manuscript editing. The author(s) read and approved the final manuscript.

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Correspondence to Festus Victor Bekun.

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Agboola, P.O., Hossain, M.E., Gyamfi, B.A. et al. Environmental consequences of foreign direct investment influx and conventional energy consumption: evidence from dynamic ARDL simulation for Turkey. Environ Sci Pollut Res 29, 53584–53597 (2022). https://doi.org/10.1007/s11356-022-19656-3

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