The Impact of Financial Development, Foreign Direct Investment and Geopolitical Risk on CO2 Emissions: Evidence from Turkey

Yıl 2024, , 1617 - 1640, 27.09.2024

Şehmus Aydın , Ferhat Öztutuş , İbrahim Halil Polat

https://doi.org/10.25295/fsecon.1513450

Öz

The rise in greenhouse gas emissions, particularly carbon dioxide (CO₂), represents one of the most significant challenges facing humanity's existence in the 21st century. It is crucial to implement the measures to reduce these emissions to achieve environmental sustainability. Turkey, along with many nations, is striving to reduce its CO₂ emissions in accordance with the United Nations' 2030 Sustainable Development Goals. This study explores the effects of financial development (FIN), foreign direct investment (FDI), and geopolitical risk (GPR) on Turkey's CO₂ emissions, using annual data from 1985 to 2022. To investigate long-term relationships among these variables, we apply the RALS-Fourier ADF (RALS-FADF) unit root test, the Fractional Fourier ADL (FFADL) cointegration test, and the Fully Modified Ordinary Least Squares (FMOLS) method. The evidence from the FMOLS show that FIN, FDI, and GPR lead to higher CO2 emissions in Turkey over time. It is concluded that any policies designed to achieve a sustainable environmental quality in Turkey must consider mitigating the negative effects of the financial development, foreign direct investment and geopolitical risks on the environment.

Anahtar Kelimeler

CO2 Emissions, Financial Development, Foreign Direct Investment, Geopolitical Risk, Turkey

Finansal Gelişme, Doğrudan Yabancı Yatırımlar ve Jeopolitik Riskin CO2 Emisyonları Üzerindeki Etkisi: Türkiye'den Kanıtlar

Öz

Başta karbondioksit (CO₂) olmak üzere sera gazları emisyonlarındaki artış, 21. yüzyılda insanlığın karşı karşıya olduğu en önemli zorluklardan birini teşkil etmektedir. Çevresel sürdürülebilirliğin sağlanması için bu emisyonların azaltılmasına yönelik tedbirlerin uygulanması büyük önem taşımaktadır. Türkiye, birçok ülke ile birlikte, Birleşmiş Milletler'in 2030 Sürdürülebilir Kalkınma Hedefleri doğrultusunda CO₂ emisyonlarını azaltmaya çalışmaktadır. Bu bağlamda bu çalışma, 1985-2022 yılları arasındaki yıllık verileri kullanarak, finansal gelişme (FIN), doğrudan yabancı yatırımlar (FDI) ve jeopolitik riskin (GPR) Türkiye'deki CO₂ emisyonları üzerindeki etkilerini araştırmaktadır. Değişkenler arasındaki uzun vadeli ilişkileri ortaya koymak için RALS-Fourier ADF (RALS-FADF) birim kök testi, Kesirli Fourier ADL (FFADL) eşbütünleşme testi ve Tam Düzeltilmiş Sıradan En Küçük Kareler (FMOLS) yöntemleri kullanılmıştır. FMOLS metodundan elde edilen araştırma bulguları, FIN, FDI ve GPR'nin Türkiye'de uzun dönemde CO2 emisyonunu arttırdığını göstermektedir. Dolayısıyla, Türkiye'de sürdürülebilir bir çevre kalitesine ulaşabilmek için, finansal kalkınma, doğrudan yabancı yatırımlar ve jeopolitik risklerle ilgili olarak tasarlanacak politikaların çevre üzerindeki olumsuz etkilerini en aza indirecek şekilde tasarlanması gerekmektedir.

Anahtar Kelimeler

CO2 Emisyonları, Finansal Kalkınma, Doğrudan Yabancı Yatırım, Jeopolitik Risk, Türkiye

Kaynakça

• Abbasi, F., & Riaz, K. (2016). CO2 Emissions and Financial Development in an Emerging Economy: An Augmented VAR Approach. Energy Policy, 90, 102-114. https://doi.org/10.1016/j.enpol.2015.12.017
• Ali, K., Jianguo, D. & Kırıkkaleli, D. (2023). How Do Energy Resources and Financial Development Cause Environmental Sustainability?. Energy Reports, 9, 4036-4048. https://doi.org/10.1016/j.egyr.2023.03.040
• Ahmad, M., Khan, Z., Ur Rahman, Z. & Khan, S. (2018). Does Financial Development Asymmetrically Affect CO2 Emissions in China? An Application of the Nonlinear Autoregressive Distributed Lag (NARDL) Model. Carbon Management, 9(6), 631-644. https://doi.org/10.1080/17583004.2018.1529998
• Alsagr, N. & Van Hemmen, S. (2021). The Impact of Financial Development and Geopolitical Risk on Renewable Energy Consumption: Evidence from Emerging Markets. Environmental Science and Pollution Research, 28(20), 25906-25919. https://doi.org/10.1007/s11356-021-12447-2
• Amri, F. (2018). Carbon Dioxide Emissions, Total Factor Productivity, ICT, Trade, Financial Development, and Energy Consumption: Testing Environmental Kuznets Curve Hypothesis for Tunisia. Environmental Science and Pollution Research, 25(33), 33691-33701. https://doi.org/10.1007/s11356-018-3331-1
• Anser, M. K., Syed, Q. R. & Apergis, N. (2021). Does Geopolitical Risk Escalate CO2 Emissions? Evidence from the BRICS Countries. Environmental Science and Pollution Research, 28(35), 48011-48021. https://doi.org/10.1007/s11356-021-14032-z
• Anwar, A., Sinha, A., Sharif, A., Siddique, M., Irshad, S., Anwar, W. & Malik, S. (2022). The Nexus Between Urbanization, Renewable Energy Consumption, Financial Development, And CO2 Emissions: Evidence from Selected Asian Countries. Environment, Development and Sustainability, 24(5), 6556-6576. https://doi.org/10.1007/s10668-021-01716-2
• Assi, A. F., Zhakanova Isiksal, A. & Tursoy, T. (2021). Renewable Energy Consumption, Financial Development, Environmental Pollution, and Innovations in the ASEAN+3 Group: Evidence from (P-ARDL) Model. Renewable Energy, 165, 689-700. https://doi.org/10.1016/j.renene.2020.11.052
• Atsu, F., Adams, S. & Adjei, J. (2021). ICT, Energy Consumption, Financial Development, and Environmental Degradation in South Africa. Heliyon, 7(7), e07328. https://doi.org/10.1016/j.heliyon.2021.e07328
• Balıbey, M. (2015). Relationships Among CO2 Emissions, Economic Growth and Foreign Direct Investment and the Environmental Kuznets Curve Hypothesis in Turkey. International Journal of Energy Economics and Policy, 5(4), 1042-1049. https://www.econjournals.com/index.php/ijeep/article/view/1462/906
• Balsalobre-Lorente, D., Topaloglu, E. E., Nur, T. & Evcimen, C. (2023). Exploring the Linkage Between Financial Development and Ecological Footprint in APEC Countries: A Novel View Under Corruption Perception and Environmental Policy Stringency. Journal of Cleaner Production, 414, 137686. https://doi.org/10.1016/j.jclepro.2023.137686
• Banerjee, P., Arčabić, V. & Lee, H. (2017). Fourier ADL Cointegration Test to Approximate Smooth Breaks with New Evidence from Crude Oil Market. Economic Modelling, 67, 114-124. Doi: 10.1016/j.econmod.2016.11.004
• Bildirici, M. E. (2021). Terrorism, Environmental Pollution, Foreign Direct Investment (FDI), Energy Consumption, and Economic Growth: Evidences from China, India, Israel, and Turkey. Energy & Environment, 32(1), 75-95. https://doi.org/10.1177/0958305X20919409
• Boutabba, M. A. (2014). The Impact of Financial Development, Income, Energy and Trade on Carbon Emissions: Evidence from the Indian Economy. Economic Modelling, 40, 33-41. https://doi.org/10.1016/j.econmod.2014.03.005
• Byrne, B., Baker, D.F., Basu, S., vd. (2023). National CO2 Budgets (2015-2020) Inferred from Atmospheric CO2 Observations in Support of the Global Stocktake. Earth System Science Data, 15, 963-1004. https://doi.org/10.5194/essd-15-963-2023
• Caldara, D. & Iacoviello, M. (2022). Measuring Geopolitical Risk. American Economic Review, 112(4), 1194-1225.
• Caruso, G., Colantonio, E. & Gattone, S. A. (2020). Relationships between Renewable Energy Consumption, Social Factors, and Health: A Panel Vector Auto Regression Analysis of a Cluster of 12 EU Countries. Sustainability, 12(7), 2915. https://doi.org/10.3390/su12072915
• Cengiz, O. & Manga, M. (2022). Is There Any Relationship Between Geopolitical Risk and Climate Change?. Ekonomski Vjesnik, 35(1), 99-112. https://doi.org/10.51680/ev.35.1.8
• Chen, L., Gozgor, G., Lau, C. K. M., Mahalik, M. K., Rather, K. N. & Soliman, A. M. (2024). The Impact of Geopolitical Risk on CO2 Emissions Inequality: Evidence From 38 Developed and Developing Economies. Journal of Environmental Management, 349, 119345. https://doi.org/10.1016/j.jenvman.2023.119345
• Coşkuner, C., Paskeh, M. K., Olasehinde‐Williams, G. & Akadiri, S. S. (2020). Economic and Social Determinants of Carbon Emissions: Evidence from Organization of Petroleum Exporting Countries. Journal of Public Affairs, 20(3), e2092. https://doi.org/10.1002/pa.2092
• Ding, Y., Yang, Q. & Cao, L. (2021). Examining The Impacts of Economic, Social, and Environmental Factors on the Relationship Between Urbanization and CO2 Emissions. Energies, 14(21), 7430. https://doi.org/10.3390/en14217430
• Essandoh, O. K., Islam, M. & Kakinaka, M. (2020). Linking International Trade and Foreign Direct Investment to CO2 Emissions: Any Differences Between Developed and Developing Countries?. Science of The Total Environment, 712, 136437. https://doi.org/10.1016/j.scitotenv.2019.136437
• Farhani, S. & Ozturk, I. (2015). Causal Relationship Between CO2 Emissions, Real GDP, Energy Consumption, Financial Development, Trade Openness, and Urbanization in Tunisia. Environmental Science and Pollution Research, 22(20), 15663-15676. https://doi.org/10.1007/s11356-015-4767-1
• Friedlingstein, P., O’Sullivan, M., Jones, M. W., vd. (2023). Global Carbon Budget 2023. Earth Syst. Sci. Data 15, 5301-5369. https://doi.org/10.5194/essd-15-5301-2023
• Gill, A. R., Hassan, S. & Haseeb, M. (2019). Moderating Role of Financial Development in Environmental Kuznets: A Case Study of Malaysia. Environmental Science and Pollution Research, 26(33), 34468-34478. https://doi.org/10.1007/s11356-019-06565-1
• Guru, B. K. & Yadav, I. S. (2019). Financial Development and Economic Growth: Panel Evidence from BRICS. Journal of Economics, Finance and Administrative Science, 24(47), 113-126. https://doi.org/10.1108/JEFAS-12-2017-0125
• Habiba, U. & Xinbang, C. (2022). The Impact of Financial Development on CO2 Emissions: New Evidence from Developed and Emerging Countries. Environmental Science and Pollution Research, 29(21), 31453-31466. https://doi.org/10.1007/s11356-022-18533-3
• Hao, Y. & Liu, Y.-M. (2015). Has the Development of FDI and Foreign Trade Contributed to China’s CO2 Emissions? An Empirical Study with Provincial Panel Data. Natural Hazards, 76(2), 1079-1091. https://doi.org/10.1007/s11069-014-1534-4
• İmamoğlu, İ. K. (2023). Sürdürülebilir Ekonomik Büyüme, Jeopolitik Risk ve Çevre Performansı: ABD Ekonomisinden Kanıtlar. Asya Studies, 7(25), 245-258. https://doi.org/10.31455/asya.1336189
• IEA (International Energy Agency). (2024). Türkiye-Countries & Regions. IEA. https://www.iea.org/countries/turkiye. [Accessed: 17/03/2024].
• Khan, M. A., Khan, M. Z., Zaman, K. & Arif, M. (2014). Global Estimates of Energy-Growth Nexus: Application of Seemingly Unrelated Regressions. Renewable and Sustainable Energy Reviews, 29, 63-71. https://doi.org/10.1016/j.rser.2013.08.088
• Koçak, E. & Şarkgüneşi, A. (2017). The Renewable Energy and Economic Growth Nexus in Black Sea and Balkan Countries. Energy Policy, 100, 51-57. https://doi.org/10.1016/j.enpol.2016.10.007
• Koçak, E. & Şarkgüneşi, A. (2018). The Impact of Foreign Direct Investment on CO2 Emissions in Turkey: New Evidence from Cointegration and Bootstrap Causality Analysis. Environmental Science and Pollution Research, 25(1), 790-804. https://doi.org/10.1007/s11356-017-0468-2
• Li, R., Wang, Q., Liu, Y. & Jiang, R. (2021). Per-Capita Carbon Emissions in 147 Countries: The Effect of Economic, Energy, Social, and Trade Structural Changes. Sustainable Production and Consumption, 27, 1149-1164. https://doi.org/10.1016/j.spc.2021.02.031
• Lu, W. C. (2018). The Impacts of Information and Communication Technology, Energy Consumption, Financial Development, and Economic Growth on Carbon Dioxide Emissions in 12 Asian Countries. Mitigation and Adaptation Strategies for Global Change, 23(8), 1351-1365. https://doi.org/10.1007/s11027-018-9787-y
• Lv, Z. & Li, S. (2021). How Financial Development Affects CO2 Emissions: A Spatial Econometric Analysis. Journal of Environmental Management, 277, 111397. https://doi.org/10.1016/j.jenvman.2020.111397
• Ma, W., Nasriddinov, F., Haseeb, M., Ray, S., Kamal, M., Khalid, N. & Ur Rehman, M. (2022). Revisiting the Impact of Energy Consumption, Foreign Direct Investment, and Geopolitical Risk on CO2 Emissions: Comparing Developed and Developing Countries. Frontiers in Environmental Science, 10, 985384. https://doi.org/10.3389/fenvs.2022.985384
• Mahalik, M. K. & Mallick, H. (2014). Energy Consumption, Economic Growth and Financial Development: Exploring the Empirical Linkages for India. The Journal of Developing Areas, 48(4), 139-159. https://doi.org/10.1353/jda.2014.0063
• Mejia, S. A. (2022). Foreign Direct Investment and the Environment: A Cross‐National Analysis of Carbon Dioxide Emissions Per Capita, 1980-2018. Sociological Forum, 37(4), 1108-1130. https://doi.org/10.1111/socf.12859
• Nazlioğlu, S., Gormus, N. A. & Soytas, U. (2016). Oil Prices and Real Estate Investment Trusts (Reits): Gradual-Shift Causality and Volatility Transmission Analysis. Energy Economics, 60, 168-175. https://doi.org/10.1016/j.eneco.2016.09.009
• Omri, A., Daly, S., Rault, C. & Chaibi, A. (2015). Financial Development, Environmental Quality, Trade and Economic Growth: What Causes What in MENA Countries. Energy Economics, 48, 242-252. https://doi.org/10.1016/j.eneco.2015.01.008
• Park, Y., Meng, F. & Baloch, M. A. (2018). The Effect of ICT, Financial Development, Growth, and Trade Openness on CO2 Emissions: An Empirical Analysis. Environmental Science and Pollution Research, 25(30), 30708-30719. https://doi.org/10.1007/s11356-018-3108-6
• Ren, S., Yuan, B., Ma, X. & Chen, X. (2014). International Trade, FDI (foreign direct investment) and Embodied CO2 Emissions: A Case Study of Chinas Industrial Sectors. China Economic Review, 28, 123-134. https://doi.org/10.1016/j.chieco.2014.01.003
• Saadaoui, H., Dogan, M. & Omri, E. (2024). The Impacts of Hydroelectricity Generation, Financial Development, Geopolitical Risk, Income, and Foreign Direct Investment on Carbon Emissions in Turkey. Environmental Economics and Policy Studies, 26(2), 239-261. https://doi.org/10.1007/s10018-023-00384-y
• Sadorsky, P. (2011). Financial Development and Energy Consumption in Central and Eastern European Frontier Economies. Energy Policy, 39(2), 999-1006. https://doi.org/10.1016/j.enpol.2010.11.034
• Salahuddin, M., Alam, K., Ozturk, I. & Sohag, K. (2018). The Effects of Electricity Consumption, Economic Growth, Financial Development and Foreign Direct Investment on CO2 Emissions in Kuwait. Renewable and Sustainable Energy Reviews, 81, 2002-2010. https://doi.org/10.1016/j.rser.2017.06.009
• Samour, A., Zhakanova Isiksal, A. & Gunsel Resatoglu, N. (2019). Testing the Impact of Banking Sector Development on Turkey’s CO2 Emissions. Applied Ecology and Environmental Research, 17(3). https://doi.org/10.15666/aeer/1703_64976513
• Saud, S., Chen, S., Danish & Haseeb, A. (2019). Impact of Financial Development and Economic Growth on Environmental Quality: An Empirical Analysis from Belt and Road Initiative (BRI) Countries. Environmental Science and Pollution Research, 26(3), 2253-2269. https://doi.org/10.1007/s11356-018-3688-1
• Shahbaz, M., Shahzad, S. J. H., Ahmad, N. & Alam, S. (2016). Financial Development and Environmental Quality: The Way Forward. Energy Policy, 98, 353-364. https://doi.org/10.1016/j.enpol.2016.09.002
• Şeker, F., Ertuğrul, H. M. & Çetin, M. (2015). The Impact of Foreign Direct Investment on Environmental Quality: A Bounds Testing and Causality Analysis for Turkey. Renewable and Sustainable Energy Reviews, 52, 347-356. https://doi.org/10.1016/j.rser.2015.07.118
• Tamazian, A., Chousa, J. P. & Vadlamannati, K. C. (2009). Does Higher Economic and Financial Development Lead to Environmental Degradation: Evidence from BRIC Countries. Energy Policy, 37(1), 246-253. https://doi.org/10.1016/j.enpol.2008.08.025
• Uddin, I., Usman, M., Saqib, N. & Makhdum, M. S. A. (2023). The Impact of Geopolitical Risk, Governance, Technological Innovations, Energy Use, and Foreign Direct Investment on CO2 Emissions in the BRICS Region. Environmental Science and Pollution Research, 30(29), 73714-73729. https://doi.org/10.1007/s11356-023-27466-4
• UNCTAD. (2024). UNCTADstat-General Profile: Türkiye. UNCTADstat. https://unctadstat.unctad.org/CountryProfile/GeneralProfile/en-GB/792/index.html). [Accessed: 11/03/2024]
• Wang, K. H., Kan, J. M., Jiang, C.-F. & Su, C.-W. (2022). Is Geopolitical Risk Powerful Enough to Affect Carbon Dioxide Emissions? Evidence from China. Sustainability, 14(13), 7867. https://doi.org/10.3390/su14137867
• World Bank. (2024). GDP (Current US$)-Turkiye. World Bank National Accounts Data. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=TR [Accessed: 07/04/2024].
• World Bank. (2024). World Bank Open Data. https://data.worldbank.org. [Accessed: 07/04/2024].
• Xu, Z., Baloch, M. A., Danish, Meng, F., Zhang, J. & Mahmood, Z. (2018). Nexus between Financial Development and CO2 Emissions in Saudi Arabia: Analyzing the Role of Globalization. Environmental Science and Pollution Research, 25(28), 28378-28390. https://doi.org/10.1007/s11356-018-2876-3
• Yang, F. (2019). The Impact of Financial Development on Economic Growth in Middle-Income Countries. Journal of International Financial Markets, Institutions and Money, 59, 74-89. https://doi.org/10.1016/j.intfin.2018.11.008
• Yılancı, V., Aydın, M. & Aydın, M. (2019). Residual Augmented Fourier ADF Unit Root Test. MPRA Paper 96797, University Library of Munich. https://mpra.ub.uni-muenchen.de/96797/
• Zhang, Y.-J. (2011). The Impact of Financial Development on Carbon Emissions: An Empirical Analysis in China. Energy Policy, 39(4), 2197-2203. https://doi.org/10.1016/j.enpol.2011.02.026
• Zhao, Z., Gozgor, G., Lau, M. C. K., Mahalik, M. K., Patel, G. & Khalfaoui, R. (2023). The Impact of Geopolitical Risks on Renewable Energy Demand in OECD countries. Energy Economics, 122, 106700. https://doi.org/10.1016/j.eneco.2023.106700