This study investigates the relevance of the environmental Kuznets curve (EKC) hypothesis in Turkey for the period 1974–2010 using carbon dioxide (CO₂) emissions, energy consumption, economic growth, and foreign direct investment (FDI) variables. The long-run equilibrium relationship among CO₂ emissions, energy consumption, economic growth, and FDI is revealed using the bounds test. The error correction model under autoregressive-distributed lag mechanism suggests that CO₂ emissions converge to their long-run equilibrium level by a 49.2% speed of adjustment every year by the contribution of energy consumption, economic growth, and FDI. The Toda–Yamamoto ( 1995 Toda, H.Y. , and T. Yamamoto. 1995. “Statistical Inference in Vector Autoregressions with Possibly Integrated Processes.” Journal of Econometrics 66 (1): 225–250. [Crossref], [Web of Science ®] [Google Scholar] ) causality test results imply that carbon emissions and FDI, energy consumption, and CO₂ emissions have bidirectional causal relationships. On the other hand, there are unidirectional causal relationships running from economic growth and energy consumption to FDI and from economic growth to energy consumption. Our findings provide evidence of the validity of the pollution haven hypothesis, in addition to the scale effect, and the EKC in the case of Turkey.

Many past studies have explored the relationships between income and CO₂ emissions; however, most have not covered the possible effects of financial indicators on their frameworks. This study investigates the relationships between financial development and environmental degradation in Turkey from 1960 to 2011 using a multivariate framework that focuses on economic growth and fuel consumption as additional determinants of environmental degradation. Because a unit root test indicated that data were not stationary, the Johansen co-integration test was applied, revealing that the variables under investigation are co-integrated in the long run. After establishing the long-run relationship between variables, error correction modeling identified the long-run and short-run coefficients of the variables. The findings show that in the long-run, economic growth has negative and significant effect on carbon emissions (-0.069) while fuel consumption has positive and elastic impact on carbon emissions (2.82). Therefore, the error correction term implies that CO₂ moves to its long-run equilibrium level at a speed of adjustment of 16.97% by the contributions of gross domestic product (GDP), fossil fuel consumption and financial development.