International Journal of Economics, Commerce and Management, vol.6, no.5, pp.18-31, 2018 (Refereed Journals of Other Institutions)
The relationship between trade liberalization and environmental degradation is becoming an increasingly popular issue in environmental economics in recent decades. In view of Turkey’s position as one of the main contributors to carbon dioxide (CO2) emissions in Europe, it is vital to identify the main determinants of CO2 emissions. This study investigates the causal relationship between CO2 emissions (as a proxy of environmental degradation), trade openness, economic growth, energy consumption and foreign direct investment for the period 1974-2013. The long-run relationship is examined with the Autoregressive Distributed Lag (ARDL) bounds testing approach to Cointegration and Error Correction Method (ECM). The results of the long model indicate that (i) the inverted U shape relationship between economic growth and CO2 emissions exist, (ii) trade openness has a positive but insignificant impact on CO2 emissions, and (iii) foreign direct investment and energy consumption have a direct relationship with CO2 emissions.