WHEN FOREIGN INVESTMENT TURNS BROWN: FDI AND RENEWABLE ENERGY CONSUMPTION IN TURKIC REPUBLICS

Abstract

This study examines the effect of foreign direct investment (FDI) inflows on the share of renewable energy consumption in total energy consumption in six Turkic Republics (Turkey, Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan) during the period 2000–2023 using panel data analysis. The empirical findings show that an increase in per capita gross domestic product increases the share of renewable energy consumption, whereas FDI inflows decrease the share of renewable energy consumption. The findings reveal that FDI directs the energy portfolio towards fossil fuel-intensive sectors and confirms the Pollution Haven Hypothesis for the developing countries covered in the study. The study's original contribution to the literature is twofold. First, it is one of the first studies to examine the relationship between FDI and renewable energy specifically in the Turkic Republics. Second, in addition to existing studies that mostly focus on the effects of FDI on economic growth, it sheds light on the integration of energy policies and foreign investment strategies by addressing the dimension of renewable energy consumption.