Pollution shelter hypothesis: The case of Türkiye

The aim of this study is to analyze the relationship between foreign direct investment (FDI) inflows to Turkey and carbon dioxide emissions (CO2). For this purpose, the effects of FDI, GDP (gross domestic product) and energy consumption on CO2 emissions are tested using annual data for the period 1980-2021. As econometric methodology, Extended Dickey Fuller (ADF) Unit Root Test and PP (Phillips Perron) Unit Root Test are applied to find out the stationarity of the variables, Johansen Cointegration Test for cointegration relationship, Vector Error Correction Model (VECM) test is applied to examine the short and long run relationships between the variables. Finally, the direction of the relationship between variables is analyzed by VECM Causality analysis. According to the findings obtained as a result of the analysis, only a causality relationship from energy consumption to CO2 was found as a result of VECM short-run causality analysis. Therefore, it is found that FDI and GDP do not have a significant effect on CO2 emissions and that these variables do not affect short-term environmental pollution. According to the results of the long-run Granger Causality analysis, it is concluded that GDP, FDI and energy consumption affect CO2 emissions unidirectionally. In the findings of the study, the validity of the pollution refuge hypothesis (PRH), which is the hypothesis that FDI inflows to Turkey increase CO2 emissions, is confirmed and various policy recommendations are presented based on these results.