Is the relationship between foreign direct investment and energy consumption asymmetric? Empirical evidence from Türkiye
Is the relationship between foreign direct investment and energy consumption asymmetric? Empirical evidence from Türkiye

Summary/Abstract: Developing countries need foreign direct investment (FDI) to close capital and investment gaps. At the same time, however, thesecountries want to improve their export performance through greater openness. This paper examines whether the relationshipbetween FDI, openness, and energy consumption are asymmetric in Türkiye. A nonlinear ARDL analysis of 38 years of data collectedbetween 1984 and 2021 was performed for this purpose. The results show an asymmetric relationship between FDI and energyconsumption in the short and long-run. The relationship between openness and energy consumption is shown to be asymmetricin the long-run, but symmetrical in the short-run. Finally, the results show that positive and negative changes in FDI and energyconsumption in the same direction. These results indicate that FDI contributes to energy consumption in Türkiye. Given Türkiye’sforeign dependence on energy, it would be a strategic move to increase renewable energy consumption with economic growth.

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