THE POLLUTION HAVEN HYPOTHESIS AND FOREIGN DIRECT INVESTMENTS: EVIDENCE FROM THE CENTRAL ASIAN TURKIC REPUBLICS

Year 2019, Volume: 1 Issue: 1, 34 - 50, 15.01.2019

Nalan Isık

Abstract

In recent years, the Central Asian Turkic Republics have started to become centers of attraction for the foreign direct investments of multinational companies. In the literature, it is a matter of debate whether the relocation of multinational companies with low environmental standards increases environmental pollution associated with foreign direct investments. In this context, this study aims to investigate the relationship between carbon dioxide (CO2) emissions and foreign direct investments in the Central Asian Turkic Republics. For that purpose, a panel co-integration test was applied to the CO2 emission rate and foreign direct investment data in six Turkic Republics (Azerbaijan, Kyrgyzstan, Kazakhstan, Turkey, Turkmenistan and Uzbekistan) in the period between 1995-2016. The long-term co-integration coefficients of variables were examined with the panel dynamic least squares method across the panel. The empirical estimation results demonstrate that foreign direct investments and CO2 emissions have a long-term positive and significant relationship.

Keywords

pollution haven hypothesis, foreign direct investments, Turkic republics, panel data analysis, CO2 emissions

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