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Is the relationship between foreign direct investment and energy consumption asymmetric? Empirical evidence from Türkiye

Author

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  • Cem Gökce
  • Özgür Aydoğuş

Abstract

Developing countries need foreign direct investment (FDI) to close capital and investment gaps. At the same time, however, these countries want to improve their export performance through greater openness. This paper examines whether the relationship between FDI, openness, and energy consumption are asymmetric in Türkiye. A nonlinear ARDL analysis of 38 years of data collected between 1984 and 2021 was performed for this purpose. The results show an asymmetric relationship between FDI and energy consumption in the short and long-run. The relationship between openness and energy consumption is shown to be asymmetric in the long-run, but symmetrical in the short-run. Finally, the results show that positive and negative changes in FDI and energy consumption in the same direction. These results indicate that FDI contributes to energy consumption in Türkiye. Given Türkiye’s foreign dependence on energy, it would be a strategic move to increase renewable energy consumption with economic growth.

Suggested Citation

  • Cem Gökce & Özgür Aydoğuş, 2024. "Is the relationship between foreign direct investment and energy consumption asymmetric? Empirical evidence from Türkiye," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 4, pages 420-433.
    • Handle: RePEc:aoq:ekonom:y:2024:i:4:p:420-433
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    More about this item

    Keywords

    energy consumption; openness; Foreign direct investment (FDI); Nonlinear ARDL;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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