The Impact of Foreign Direct Investment and Economic Growth on Carbon Emissions in Turkey: An ARDL Approach

Abstract

Purpose – In recent years, climate change and global warming have become some of the most serious problems facing the international community. The purpose of this research is to determine whether two macroeconomic variables considered important in Turkey-foreign direct investment and economic growth-have an impact on carbon emissions.
Design/methodology/approach – A prerequisite for time series analysis is determinig the degree of stationarity of the series. Fort his purpose, Augmented Dickey-Fuller (ADF) unit root test was applied. The different degrees of integration among the series precluded the application of standard cointegration tests. Therefore, the Autoregressive Distributed Lag Model (ARDL) approach was adopted for the analysis.
Results – Analysis shows that long-term economic growth (GDP) increases environmental pollution (carbon emissions). It has also been determined that long-term Foreign Direct Investments have a positive impact on reducing carbon emissions.
Discussion – Promoting innovation and technology transfer through foreign direct investment can reduce carbon emissions. Turkey can benefit from foreign direct investment by encouraging partnerships between local firms specializing in green technologies and foreign investors to achieve sustainable industrialization.