Interactions among urbanization, industrialization and foreign direct investment (FDI) in determining the environment and sustainable development: new insight from Turkey

Abstract

This study seeks to expose environmental implication of Turkey’s urbanization towards its sustainable development. Turkey is considered a commercial cum industrial hub where economic activities are increasingly taking place. Specifcally, the economic and manufacturing activities are centered in big cities and this has drawn many people to the urban centers of the country which has potential threats to the environmental performance and sustainable development of the country. We applied 1970–2018 Turkey’s data for this assessment. Structural break, dynamic autoregressive distributed lag (ARDL)-bound and Granger causality estimates were applied in this research. From dynamic ARDL-bound test, we found long run cointegration among the selected variables. From the ARDL short run and long run, we fnd economic growth (GDP per capita) and FDI having a negative relationship with carbon emission. Also, fossil fuels, industry and urban population showed positive relationship with the carbon emission (CO2). Similar result (except for that of economic growth that is positively related to carbon emission and urban population that is signifcant) was established in the long run with varying degrees through their various coefcients. We found nexus among the variables of interest in Granger causality estimate. Hence, a two-way Granger causal relationship exist between CO2 and GDP, CO2 and fossil fuels, GDP and fossil fuels while one-way causal relationship exist from urban population to CO2, from FDI and urban population to GDP, from urban population to fossil fuels, from urban population to FDI. Similar pattern Granger result is confrmed in both short run and long run. With these fndings, policy is expected to be framed towards mitigation of carbon emissions and increase the chance of achieving sustainable development through controls on urbanization and industrialization negative impacts.