Unraveling the Link Between Environment and Economic Growth in Türkiye

Abstract

This study examines the short and long-run and causative interconnections between carbon dioxide (CO2) emissions, economic growth, energy use, and industrialization in Türkiye using yearly data from 1971 to 2021. The paper employs the cointegration autoregressive distributed lag (ARDL) model, which indicates the presence of a long-run nexus between the variables and the estimated long-run coefficient of economic growth, energy use, and industrialization exhibit a sensitivity of -0.726, 0.563, and 0.548 changes in CO2 emissions respectively. The error-correction term is -0.563 and significant at a 1% significance level under the cointegration-ARDL model, suggesting that the deviations from the long-run equilibrium between the variables will be addressed through correction by almost 56.3% yearly. In other words, the speed of adjustment coefficients indicates that when disequilibrium occurs, adjustments returning to equilibrium take almost two years. The Toda and Yamamoto (1995) causality test indicates a unidirectional causal link from industrialization to CO2 emissions. This finding implies that industrialization harms environmental quality in Türkiye; therefore, Türkiye must prioritize sustainable industrial development and embrace green technologies.