The International Trade Analysis of Turkey’s Polluting IndustriesCihat Köksal, Güldenur Çetin
The aim of this study is to test the international trade of Turkey’s polluting sectors using variables such as foreign direct investments and economic growth within the scope of the pollution haven hypothesis and to present policy recommendations for other developing countries. This study analyzes the annual data for the 1985-2017 period by using the multivariate regression model. As a result of the empirical tests, it is seen that Turkey is more attractive in the polluting sectors because environmental regulations are not very strict during the examined periods, and it has become more likely to export in these sectors through foreign direct investments. According to the analysis results, it has been revealed that Turkey can be qualified as a pollution shelter for the relevant period, and various policy recommendations have been developed in this context.
Türkiye’de Kirlilik Yaratan Sektörlerin Dış Ticaretinin AnaliziCihat Köksal, Güldenur Çetin
Bu çalışmanın amacı kirlilik yaratan sektörlerin dış ticaretini kirlilik sığınağı hipotezi kapsamında doğrudan yabancı yatırımlar ve ekonomik büyüme gibi değişkenler kullanarak test etmek ve Türkiye örneğinden yola çıkarak diğer gelişmekte olan ülkeler için politika önerileri sunmaktır. Bu çalışma, çok değişkenli regresyon modeli ile 1985-2017 dönemlerine ait yıllık verileri analiz edilerek gerçekleştirilmiştir. Yapılan ampirik testler sonucunda Türkiye’nin incelenen dönemler içinde kirlilik üreten sektörlerde, çevresel düzenlemelerin çok sıkı olmamasından dolayı daha cazip bulunduğu ve doğrudan yabancı yatırımlar aracılığıyla bu sektörlerde daha fazla ihracat yapar hale geldiği görülmektedir. Analiz sonuçlarına göre Türkiye’nin, ilgili dönem için kirlilik sığınağı şeklinde nitelendirilebileceği ortaya konmuş olup, bu kapsamda çeşitli politika önerileri geliştirilmiştir.
With the changes and developments in production systems after the industrial revolution, the production of materials in sufficient quantity and quality to meet cross-border demands has also led to increased resource and production facility needs. The increase in the amount of waste, especially with the periods when foreign trade activities accelerated, brought up whether production brings pollution with it for countries. The fact that production, which is the most basic element in achieving the economic growth targets of the countries, is also seen as a factor that harms the environmental conditions of the countries. On the one hand, it pushes the developed countries to shift their dirty industries to the developing countries; on the other hand, it has encouraged the development of environmentally friendly production processes by establishing clean production systems.
The pollution haven hypothesis states that due to the shifting of the production by developed countries to developing countries with the liberalization process in foreign trade, there will be an increase in environmental quality in developed countries. However, in developing countries, pollution will increase, and developed countries will turn into pollution havens.
The basis of the pollution halo hypothesis is that foreign direct investments reduce environmental damage in developing countries. Therefore, the central assumption of the hypothesis, foreign direct investments, will reduce pollution in developing countries.
When the examined literature is evaluated, it is seen that the studies revealing the amount of toxic waste and the trade relationship are predominant, especially in terms of developing countries. In addition to these, some studies examine the subject by classifying the countries according to their incomes and contribute to the literature by addressing the issue of pollution depending on their income levels. When the literature is evaluated in general, it is seen that studies are investigating China, the USA, and African countries. At this point, List and Co (2000) examined the USA and found that the difference in environmental policies between states is significant. Hoffmann, Lee, Ramasamy, and Yeung (2005) found that the difference in environmental policies between states is significant for 112 countries. Atıcı and Kurt (2007) studied Turkey and found that the Pollution Haven Hypothesis is valid. Asghari (2013) studied MENA and found that the Pollution Halo Hypothesis is valid. Kivyiro and Arminen (2014) studied about six countries, and they found that the Pollution Halo Hypothesis is valid for the Democratic Republic of Congo, South Africa, and Zambia. For Zimbabwe and Kenya, the Pollution Haven hypothesis has also been found valid. Fang, Liu, and Gao (2019), Xu, Zhao, Xie, and Zhu (2020), and Cheng, Li, and Liu (2020) studied China and found that the Pollution Haven Hypothesis is valid.
In this study, the Pollution Haven Hypothesis and the Pollution Halo Hypothesis are explained, and the Pollution Haven Hypothesis is tested for Turkey for the 1985-2017 period. In this study, multivariate regression analysis was applied as a method. For this purpose, the Pollution Limit (KH), GDP (GDP), GDP squared (GDP2 ), Foreign Direct Investment (FDI), Urbanization (URB), Financial Development (FD), and Ecological Footprint (EF) variables were used. Two models were estimated in the study. The first of these is Model 1, where KH is the independent variable and GDP, GDP2 , FDI, and URB are dependent variables. Accordingly, there is a statistically significant positive relationship between KH and GDP variables. In other words, as economic growth increases, the pollution limit is positively affected. GDP2 and KH are in a statistically significant and negative relationship. There is a statistically significant and positive relationship between FDI and KH. Accordingly, as foreign direct investments increase, the pollution limits increase significantly. This finding shows us the conclusion that the pollution haven hypothesis is confirmed.
Finally, URB and KH data are statistically significant and positively correlated. As the rate of urbanization increases, the levels of pollution also increase. Since this situation also shows the transition of employment from the agricultural sector to the industrial sectors, these people are primarily employed in the polluting sectors. According to Model 2 regression results, EF is positively affected by GDP. In other words, economic growth creates environmental pollution. This result again confirms the pollution haven hypothesis in the case of Turkey, supporting the findings of Model 1. Financial development data are positively related to environmental pollution. This situation shows that the financial sectors in Turkey do not allocate resources to green sectors that will prevent environmental pollution.
In this respect, some recommendations have been developed for policymakers in Turkey. As seen, ecological footprints and greenhouse gas emissions are on the rise in Turkey. Environmental policies such as a gradual transition to renewable energy in energy production, stricter environmental regulations, and encouraging companies that produce and export based on clean technology will play an essential role in reducing pollution levels.