Foreign Direct Investment and Environmental Impact: A Comparative Analysis of Türkiye, Bulgaria, and Romania

Abstract

This study examines the impact of foreign investment inflows on pollution levels in T & uuml;rkiye, a candidate for EU membership, and Bulgaria and Romania, the most recent members, using data from 1991 to 2019. It analyses the differences between these countries through a cointegration test with structural change and an FMOLS estimator. The findings reveal that while Bulgaria and Romania, as EU members, serve as pollution havens, foreign investments in T & uuml;rkiye have no significant effect on pollution. This is attributed to T & uuml;rkiye's predominantly brown investments and its lower ability to attract foreign capital. The research highlights the EU's emphasis on environmental policies when admitting members and the implications of foreign investments on pollution.