Foreign direct capital investmentsimpact on the environment: Pollution for Turkey refuge hypothesis

One of the most important obstacles to development in developing economies is insufficient capital accumulation. The acceleration of capital movements towards developing countries with globalization has made a significant contribution to the economic progress of these countries. Foreign direct investments (FDI) contribute to the elimination of current account imbalance, development of export markets, technology transfer, development of personnel management skills, providing economic opportunities and reducing unemployment by creating new business areas. However, in recent years, there have been discussions about the effects of FDI on the environment. In the literature, there are two different views on the effects of FDI on the environment. The Pollution Haven Hypothesis is a view that multinational companies fleeing strict environmental regulations are shifting their dirty industries to developing countries through FDI. Therefore, host countries become a pollution haven for polluted industries. The second view is the Pollution Halo Hypothesis, which argues that FDI will contribute to the dissemination of technology and information in the host country, thereby increasing the use of renewable energy resources. In this way, FDI will positively affect the environmental quality of the host country. The aim of this study is to examine the possible effects of FDI for Turkiye on environmental quality. In the study, first of all, theoretical information about the concept of FDI is given. In the second part, there are approaches to the environment-economics relationship and information on international environmental agreements. In the third part, the impact of FDI on the environment in Turkey is analyzed econometrically. The findings obtained from the study are that the Pollution Haven Hypothesis is valid in Turkiye.