RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND CARBON DIOXIDE EMISSIONS: EVALUATION OF THE HYPOTHESIS OF POLLUTION HAVEN FOR TURKEY

Abstract

On the one hand, the increase in economic activities increases the environmental problems while on the other hand, the increase in environmental problems negatively affects the economic development. Therefore, effective use of environmental resources is extremely important in achieving sustainable economic development. The policies implemented by the countries to attract production and foreign direct investment (FDI) to their countries with the desire to grow are increasing the worldwide carbon dioxide emissions. The increased amount of carbon dioxide also causes environmental degradation. Thus, the impact of the capital investments on the economy as well as the environmental impacts should be investigated. The effect of foreign capital investments on CO2 emission level may vary depending on the country investing and investing. The aim of this study year of 1990-2017 for the pollution haven hypothesis for Turkey cointegration with structural breaks Maki (2012) test and is tested with the help of short-term error correction model. As a result of the analysis, a long-term positive low-positive relationship between FDI and CO2 emissions and a higher positive correlation in short-term. As a result, the pollution haven hypothesis has been confirmed.