Do Economic Complexity and Energy Consumption Affect Environmental Performance? Evidence Based on the LCC Hypothesis in the Türkiye Economy
DOI:
https://doi.org/10.2478/rsep-2025-0011Keywords:
Economic Complexity, Energy, Environment, LCC Hypothesis, TürkiyeAbstract
This study examines the environmental impacts of economic growth (GDP), economic complexity (ECI), and energy consumption (EU) in Türkiye for the period 1995–2023 within the framework of the Load Capacity Curve (LCC) hypothesis. Fourier ADL cointegration was used in the analyses, while FMOLS, DOLS, and CCR methods were used for long-term coefficient estimations. The findings reveal a significant and strong cointegration relationship between GDP, ECI, EU, and the load capacity factor (LCF). The long-term estimation results show a U-shaped relationship between GDP and the LCF. This means that the LCF initially decreases as income increases, but it increases above a certain income level, improving environmental quality. This confirms the validity of the LCC hypothesis in Türkiye. On the other hand, the negative impact of increasing ECI and EU on the LCF indicates that Türkiye's production structure and energy infrastructure have not yet reached a level capable of operating efficiently at full capacity. In this context, it is not enough for energy policies to focus solely on creating new production capacity; mechanisms must be developed to ensure more efficient and balanced use of existing infrastructure.
References
Abdi, A. H. (2023). Toward a sustainable development in sub-Saharan Africa: Do economic complexity and renewable energy improve environmental quality? Environmental Science and Pollution Research, 30(19), 55782–55798. https://doi.org/10.1007/s11356-023-26364-z
Adejumo, O. O. (2020). Environmental quality vs economic growth in a developing economy: Complements or conflicts. Environmental Science and Pollution Research, 27(6), 6163–6179. https://doi.org/10.1007/s11356-019-07101-x
Afshan, S., & Yaqoob, T. (2023). Unravelling the efficacy of green innovation and taxation in promoting environmental quality: A dual-model assessment of testing the LCC theory in emerging economies. Journal of Cleaner Production, 416, 137850. https://doi.org/10.1016/j.jclepro.2023.137850
Akadiri, S. S., Bekun, F. V., Taheri, E., & Akadiri, A. C. (2019). Carbon emissions, energy consumption and economic growth: a causality evidence. International Journal of Energy Technology and Policy, 15(2-3), 320–336. https://doi.org/10.1504/IJETP.2019.098956
Akin, F., & Ozgun, F. (2024). Impact of internet use on ecological footprint: Panel data analysis for Fragile Five countries (Brazil, India, Indonesia, South Africa, and Turkiye). Problemy Ekorozwoju, 19(2), 139–152. https://doi.org/10.35784/preko.5979
Aluko, O. A., Opoku, E. E. O., & Acheampong, A. O. (2023). Economic complexity and environmental degradation: Evidence from OECD countries. Business Strategy and the Environment, 32(6), 2767–2788.https://doi.org/10.1002/bse.3269
Banerjee, P., Arčabić, V., & Lee, H. (2017). Fourier ADL cointegration test to approximate smooth breaks with new evidence from crude oil market. Economic Modelling, 67, 114–124. https://doi.org/10.1016/j.econmod.2016.11.004
Boleti, E., Garas, A., Kyriakou, A., & Lapatinas, A. (2021). Economic complexity and environmental performance: evidence from a world sample. Environmental Modeling & Assessment, 26(3), 251–270. https://doi.org/10.1007/s10666-021-09750-0
Caglar, A. E., Destek, M. A., & Manga, M. (2024). Analyzing the load capacity curve hypothesis for the Turkiye: a perspective for the sustainable environment. Journal of Cleaner Production, 444, 141232. https://doi.org/10.1016/j.jclepro.2024.141232
Can, M., & Gozgor, G. (2017). The impact of economic complexity on carbon emissions: Evidence from France. Environmental Science and Pollution Research, 24, 16364–16370. https://doi.org/10.1007/s11356-017-9219-7
Çamkaya, S. (2024). LCC Hipotezi Çerçevesinde Çevresel Kalite ve Kentleşme Arasındaki İlişki: Türkiye’den Ampirik Kanıtlar. Fiscaoeconomia, 8(2), 739–760. https://doi.org/10.25295/fsecon.1435550
Deng, S., Tiwari, S., Khan, S., Hossain, M. R., & Chen, R. (2024). Investigating the load capacity curve (LCC) hypothesis in leading emitter economies: Role of clean energy and energy security for sustainable development. Gondwana Research, 128, 283–297. https://doi.org/10.1016/j.gr.2023.10.020
Dogan, A., & Pata, U. K. (2022). The role of ICT, R&D spending and renewable energy consumption on environmental quality: Testing the LCC hypothesis for G7 countries. Journal of Cleaner Production, 380(Part 1), 135038. https://doi.org/10.1016/j.jclepro.2022.135038
Dogan, B., Trabelsi, N., Khalfaoui, R., Ghosh, S., & Shahzad, U. (2022). Role of ethnic diversity, temperature changes, and socio-economic conditions for residential energy use and energy expenditures: Evidence from the United States. Energy and Buildings, 276, 112529. https://doi.org/10.1016/j.enbuild.2022.112529
Enders, W., & Lee, J. (2012). The flexible Fourier form and Dickey-Fuller type unit root tests. Economics Letters, 117(1), 196–199. https://doi.org/10.1016/j.econlet.2012.04.081
Erdogan, S. (2024). Linking natural resources and environmental sustainability: A panel data approach based on the load capacity curve hypothesis. Sustainable Development, 32(4), 3182–3194. https://doi.org/10.1002/sd.2836
Global Footprint Network. (2025). Ecological Footprint and Biocapacity. Retrieved August 1, 2025, from https://www.footprintnetwork.org/our-work/ecological-footprint/
Grossman, G. M., & Krueger, A. B. (1991). Environmental impacts of a North American Free Trade Agreement. National Bureau of Economic Research Working Paper No. 3914. https://doi.org/10.3386/w3914
Güneysu, Y. (2023). Türkiye’de finansal gelişme, küreselleşme ve sanayileşmenin yük kapasite faktörü üzerindeki etkisi. Gümüşhane Üniversitesi Sosyal Bilimler Dergisi, 14(3), 934–946. https://doi.org/10.36362/gumus.1294618
Hassan, S. T., Wang, P., Khan, I., & Zhu, B. (2023). The impact of economic complexity, technology advancements, and nuclear energy consumption on the ecological footprint of the USA: Towards circular economy initiatives. Gondwana Research, 113, 237–246. https://doi.org/10.1016/j.gr.2022.11.001
Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the National Academy of Sciences, 106(26), 10570–10575. https://doi.org/10.1073/pnas.0900943106
International Energy Agency. (2025). Primary energy consumption per capita (kWh). Retrieved August 1, 2025, from https://www.iea.org/
Jiang, Q., Khattak, S. I., & Rahman, Z. U. (2021). Measuring the simultaneous effects of electricity consumption and production on carbon dioxide emissions (CO₂e) in China: New evidence from an EKC-based assessment. Energy, 229, 120616. https://doi.org/10.1016/j.energy.2021.120616
Mehraaein, M., Afroz, R., Rahman, M. Z., & Muhibbullah, M. (2021). Dynamic impact of macroeconomic variables on the ecological footprint in Malaysia: Testing EKC and PHH. The Journal of Asian Finance, Economics and Business, 8(5), 583–593. https://doi.org/10.13106/jafeb.2021.vol8.no5.0583
Murshed, M., Rahman, M. A., Alam, M. S., Ahmad, P., & Dagar, V. (2021). The nexus between environmental regulations, economic growth, and environmental sustainability: Linking environmental patents to ecological footprint reduction in South Asia. Environmental Science and Pollution Research, 28(36), 49967–49988. https://doi.org/10.1007/s11356-021-13381-z
Neagu, O., & Teodoru, M. C. (2019). The relationship between economic complexity, energy consumption structure and greenhouse gas emission: Heterogeneous panel evidence from the EU countries. Sustainability, 11(2), 497. https://doi.org/10.3390/su11020497
Park, J. Y. (1992). Canonical Cointegrating Regressions. Econometrica, 60(1), 119–143. https://doi.org/10.2307/2951679
Orubu, C. O., & Omotor, D. G. (2011). Environmental quality and economic growth: Searching for environmental Kuznets curves for air and water pollutants in Africa. Energy Policy, 39(7), 4178–4188. https://doi.org/10.1016/j.enpol.2011.04.025
Park, J. Y. (1992). Canonical cointegrating regressions. Econometrica, 60(1), 119–143. https://doi.org/10.2307/2951679
Pata, U. K. (2021). Do renewable energy and health expenditures improve load capacity factor in the USA and Japan? A new approach to environmental issues. The European Journal of Health Economics, 22, 1427–1439. https://doi.org/10.1007/s10198-021-01321-0
Pata, U. K., & Kartal, M. T. (2023). Impact of nuclear and renewable energy sources on environment quality: Testing the EKC and LCC hypotheses for South Korea. Nuclear Engineering and Technology, 55(2), 587–594. https://doi.org/10.1016/j.net.2022.10.027
Pata, U. K., & Tanriover, B. (2023). Is the load capacity curve hypothesis valid for the top ten tourism destinations?. Sustainability, 15(2), 960. https://doi.org/10.3390/su15020960
Phillips, P. C. B., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I(1) processes. The Review of Economic Studies, 57(1), 99–125. https://doi.org/10.2307/2297545
Rafique, M. Z., Nadeem, A. M., Xia, W., Ikram, M., Shoaib, H. M., & Shahzad, U. (2022). Does economic complexity matter for environmental sustainability? Using ecological footprint as an indicator. Environment, Development and Sustainability, 24, 4623–4640. https://doi.org/10.1007/s10668-021-01625-4
Rahman, M. M. (2017). Do population density, economic growth, energy use and exports adversely affect environmental quality in Asian populous countries? Renewable and Sustainable Energy Reviews, 77, 506–514. https://doi.org/10.1016/j.rser.2017.04.041
Siche, R., Pereira, L., Agostinho, F., & Ortega, E. (2010). Convergence of ecological footprint and emergy analysis as a sustainability indicator of countries: Peru as case study. Communications in Nonlinear Science and Numerical Simulation, 15(10), 3182–3192. https://doi.org/10.1016/j.cnsns.2009.10.027
Stock, J. H., & Watson, M. W. (1993). A simple estimator of cointegrating vectors in higher order integrated systems. Econometrica, 61(4), 783–820. https://doi.org/10.2307/2951763
Suki, N. M., Sharif, A., Afshan, S., & Suki, N. M. (2020). Revisiting the environmental Kuznets curve in Malaysia: the role of globalization in sustainable environment. Journal of Cleaner Production, 264, 121669. https://doi.org/10.1016/j.jclepro.2020.121669
Tenaw, D., & Beyene, A. D. (2021). Environmental sustainability and economic development in sub-Saharan Africa: A modified EKC hypothesis. Renewable and Sustainable Energy Reviews, 143, 110897. https://doi.org/10.1016/j.rser.2021.110897
The Atlas of Economic Complexity (2025). Country & Product Complexity Rankings. Retrieved August 1, 2025, from https://atlas.cid.harvard.edu/rankings
Uche, E., Das, N., & Bera, P. (2023). Re-examining the environmental Kuznets curve (EKC) for India via the multiple threshold NARDL procedure. Environmental Science and Pollution Research, 30, 11913–11925. https://doi.org/10.1007/s11356-022-22912-1
Uçar, M., Ülger, M., & Atamer, M. A. (2025). Effects of economic growth and energy consumptions on environmental degradation within the framework of LCC hypothesis in BRICS countries. Scientific Annals of Economics and Business, 72(1), 1–19. https://dx.doi.org/10.47743/saeb-2025-0002
Wang, S., Zafar, M. W., Vasbieva, D. G., & Yurtkuran, S. (2024). Economic growth, nuclear energy, renewable energy, and environmental quality: Investigating the environmental Kuznets curve and load capacity curve hypothesis. Gondwana Research, 129, 490–504. https://doi.org/10.1016/j.gr.2023.06.009
World Bank. (2025). Gross domestic product per capita (constant 2015 US$). Retrieved August 1, 2025, from https://data.worldbank.org/
Yang, M., She, D., Abbas, S., Ai, F., & Adebayo, T. S. (2023). Environmental cost of financial development within the framework of the load capacity curve hypothesis in the BRICS economies: do renewable energy consumption and natural resources mitigate some burden?. Geological Journal, 58(10), 3915–3927. https://doi.org/10.1002/gj.4817
