Analysis of environmental impacts of foreign trade in Turkey and developing countries within the Environmental Kuznets Curve

Foreign trade is an important factor in the economic development of countries. Increased production with the development of industrialization leads to excessive use of natural resources and increase environmental pollution. The increase in environmental pollution over time has reached a level that threatens living life. The increasing environmental pollution problem has led researchers to conduct studies in this field especially in recent years. In this study, the effects of foreign trade on environment in developing countries were analyzed by using panel data method with annual data of 1980-2014 period. Same time the validity of the Environmental Kuznets Curve for developing countries was also examined. The study includes 32 developing countries with data for the period 1980-2014. CO2 emissions taken as the variable representing environmental pollution were taken as dependent variables, GDP and EXPORT variables were taken as explanatory variables. In order to determine the method to be used in the analysis, Cross-Section Dependence (CSD) for the variables and the model was examined and CSD was found in both the variables and the model. CADF Unit Root Test was used to examine whether the variables were stationary or not depending on the presence of CSD. As a result of the CADF test, it was determined that the variables were not stationary at the level, but they were stationary when the first differences were taken. Westerlund ECM Panel cointegration test was used to examine the relationship between the variables. The reason for using this test is that CSD is valid and all variables are stationary when the first differences are taken. Westerlund ECM Panel cointegration test showed that there was no long-term relationship between the variables. After the cointegration test, the estimate of the model was analyzed by the Driscoll-Kraay test. After the cointegration test, the estimation of the model was analyzed by the Driscoll-Kraay test, which is a predictor resistant to the presence of CSD, Autocorrelation and Variing Variance. The results of the analysis showed that GDP and exports had a statistically positive effect on carbon dioxide emissions. The coefficient of GDP2 used for testing the Environmental Kuznets Curve was found to be negative. The Environmental Kuznets Curve hypothesis obtained these results demonstrate the validity for Turkey and developing countries. In other words, the Environmental Kuznets Curve for these countries is inverse U. According to this, while the GDP increases up to a certain level of development in developing countries increase environmental pollution, it has been found that environmental pollution has started to decrease after this level. Keywords: GDP, Emission of CO2, Environmental Kuznets Curve, Export, Panel Data Analys.