Renewable Energy and Foreign Direct Investments: The Case of Turkey

This study examines the impact of foreign direct investments (FDIs) on renewable energy within the Turkish economy. The analysis employs the Johansen cointegration method and the Hacker-Hatemi (2006) bootstrap causality test. The results of these methods indicate that there is no long-term relationship between FDIs and renewable energy. Furthermore, no causality link between these variables has been detected. These findings suggest that FDIs do not affect renewable energy through mechanisms such as technological diffusion or environmental pollution. Therefore, fluctuations in FDIs are unlikely to have either positive or negative effects on renewable energy consumption. These results highlight that the connection between foreign investments and the renewable energy sector in Turkey is limited. Consequently, investment strategies or policy changes in this context are unlikely to produce significant transformations in the renewable energy sector. This situation underscores the need for broader and more comprehensive studies that take into account various factors to better understand the dynamics of foreign direct investments in the energy sector. Additionally, the findings indicate the necessity of developing different strategic approaches and policies to increase investments in renewable energy.