The role of trade and FDI for CO 2 emissions in Turkey: Nonlinear relationships

Abstract

This paper examines the effects of foreign trade and foreign direct investment (FDI) on CO 2 emissions in Turkey. We consider linear and nonlinear ARDL models and find significant asymmetric effects of exports imports and FDI on CO 2 emissions per capita. However FDI has no statistically significant long-run effects. In the long run decreases in exports reduce CO 2 emissions per capita but increases in exports have no statistically significant effects. Increases in imports push up CO 2 emissions per capita while decreases in imports have no long-run effects. On the other hand CO 2 intensity which measures CO 2 emissions per unit of energy is not influenced by exports and imports nor by FDI. Instead it is affected positively by financial development and urbanization. Also we find that an environmental Kuznets curve is present for both CO 2 measures so that increases in real GDP per capita have led to reductions in CO 2 emissions for at least the most recent decade controlling for other confounding factors. Furthermore the sectoral shares of CO 2 emissions in total CO 2 emissions change asymmetrically with foreign trade for two of four sectors with export increases leading to lower CO 2 shares and imports having the opposite effect. © 2019 Elsevier B.V.