The econometric analysis of the impact of foreign direct investments on renewable energy production in Turkey

Energy is a fundamental element used both in people's social life and in the production processes of companies. The developing economies of the world need more and more energy every day. There are two significant reasons for this increasing demand. The first of these is the economic growth of the countries, and as a result, the desire of individuals to increase their quality of life. The second is growing population of the world. The energy need, especially since the industrial revolution, that is, the second half of the 18th century, has initiated to be met mostly from fossil resources. The utilization of fossil resources in energy production causes serious problems on health, environment and economy. In addition, dependence on these resources brings along the problem of energy supply security for countries. The problems that arise with the utilize of fossil energy resources have led countries to produce energy from alternative sources. Generating energy from renewable resources, which are sourced from nature and have clean and national nature, is a serious alternative to countries. However, the transition from producing energy from fossil resources to producing energy from renewable energy resources brings with it some difficulties. The most important of these challenges is how and from which sources this transition will be financed. In this study, the financial determinants of renewable energy production over Turkey are tried to be determined for the period 1965-2019. Therefore, the aim of the study is to achieve empirical evidence on whether foreign direct investment, domestic bank loans to the private sector and financial development level have short and long-term effects on renewable energy production in Turkey. According to the results obtained from the ARDL bounds testing framework, foreign direct investment inflows have a negative and significant effect on the share of electrical energy produced from renewable resources in total electricity production. According to another important result, the ratio of domestic bank loans to the private sector to GDP has a positive and significant effect on the share of renewable resources in total electricity energy production, which is the dependent variable. According to the another result, the level of financial development in Turkey positively affects energy production from renewable resources, but this result is not statistically significant.