Do economic complexity and energy consumption affect environmental performance? Evidence based on the LCC hypothesis in the Türkiye economy

Selin Dincer and Fatih Akın
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Selin Dincer: Kırıkkale University, Kırıkkale, Türkiye
Fatih Akın: Erzincan Binali Yıldırım University, Erzincan, Türkiye

Review of Socio - Economic Perspectives, 2025, vol. 10, issue 2, 21-30

Abstract: 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 enoughfor energy policies to focus solely on creating new production capacity; mechanisms must be developed to ensure more efficient and balanced use of existing infrastructure.

Keywords: Economic Complexity; Energy; Environment; LCC Hypothesis; Türkiye (search for similar items in EconPapers)
JEL-codes: C22 O13 O44 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:aly:journl:202358

DOI: 10.2478/rsep-2025-0011

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