Foreign direct investment amidst global economic downturn: is there a time-varying implication for environmental sustainability targets?

Turkey attracted more foreign investment in a period when global foreign direct investment flows experienced a recession due to the USA-China trade war/tension coupled with structural issues within the EU nations. In this paper, the time-varying impact of foreign direct investment on environmental sustainability targets amidst global economic downturn was examined. To achieve this, a time-varying parameter approach, which adequately deals with potential parameter instabilities and nonlinearities, and effectively captures impact variations over time, was employed to investigate the impacts of increased foreign direct investment on environmental degradation amidst global economic downturn for the period 1970-2017. Results showed that the inflow of foreign direct investment (FDI), energy use, urbanization, and real income has led to environmental problems in Turkey. It is thus recommended that the government does the following: (i) enact policies that emphasize green FDI inflows, (ii) enforce tighter environmental policies that deter the immigration of dirty production processes,(iii) engage in mixed and country-specific environmental policies in combating pollution, (iv) ensure domestic investors to adhere strictly to the nation's environmental policies, and (v) enact policies to foster mutual cooperation and understanding between the local and foreign stakeholders in a manner that drives the use of energy-saving technologies in production activities and the use of renewables in place of fossil fuels to control environmental hazards for both the immediate and future generations.