EMPIRICAL STUDY ON RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND ENVIRONMENTAL TAXES: EUROPEAN UNION AND TURKEY


Gunduz I. O. , YAKAR S. , Agun B. H.

JOURNAL OF ENVIRONMENTAL PROTECTION AND ECOLOGY, cilt.14, ss.799-808, 2013 (SCI İndekslerine Giren Dergi) identifier identifier

  • Cilt numarası: 14 Konu: 2
  • Basım Tarihi: 2013
  • Dergi Adı: JOURNAL OF ENVIRONMENTAL PROTECTION AND ECOLOGY
  • Sayfa Sayıları: ss.799-808

Özet

Global efforts towards environmental protection have been on the political agenda especially since the early 1970's and have increased since the 1990's. In this process, the notion of sustainable development which has three basic dimensions as economic, social and environmental, has come to the fore and has spread as a global political goal. Especially with the globalisation process beginning from the 1980's, sustainable development has become frequently pronounced concept because of the internationalisation of economic activities maintained by growing investments, particularly foreign direct investment (FDI) and raise of environmental concerns. In this context, it is necessary to achieve environmental protection and economic growth and to make their integration mutually supportive as an aspect of sustainable development. Environmental taxes are integral for sustainable development as an economic instrument because they have an essential role in affecting environmentally undesirable activities through the price mechanism. However, taxes are one of the determinants that affect FDI which is crucial for economic growth and, therefore, for sustainable development. This paper aims to seek the effect of environmental taxes on inward FDI stocks by analysing the empirical relationship between inward FDI stocks and environmental taxes for the 27 European Union (EU) countries and Turkey over the period 1995-2008, with the Arellano-Bond Dynamic Panel Data Estimation method by using GMM forecast technique. In the light of the empirical findings, the study concluded that there is no statistically significant relationship between inward FDI stocks and environmental taxes.