The asymmetric nexus of entrepreneurship and environmental quality in a developing economy

Abstract

In spite of the vital role entrepreneurship plays in an economy, recent observations especially from the perspective of climate-related economic activities are indications for the inclusive probe of other salient elements responsible for environmental challenges. Considering the aforementioned framework, therefore, this study explores the asymmetric impact of entrepreneurship on the environmental quality for a developing economy such as Turkey. In a unique dimension, this study utilizes the nonlinear autoregressive distributed lag model with the aid of yearly data from 1985-2016 while incorporating other related determinants of environmental sustainability. The estimation results depict the presence of asymmetric short-run and long-run impact of the explanatory variables on environmental quality. Interestingly, the results confirm a negative impact of entrepreneurial activities, energy utilization, financial development, and economic growth on the environmental quality irrespective of the nature (either positive or negative) of the shock in the short and long run. However, a positive (negative) shock in trade openness worsens (improve) environmental quality in the short and long run. Furthermore, the investigation affirms the existence of the environmental Kuznets curve (EKC) for Turkey. The main outcome from this paper shows that entrepreneurship has a crucial effect on the environment of Turkey. Generally, this study suggests the introduction of incentives to motivate the creation of sustainable businesses, technological innovation, and smart cities to mitigate its negative impact on the environment is far begging for critical attention in the country.