Specialization, productivity and competitiveness in service sector

The aim of this study is to examine the relationship between specialization and productivity in the service sector. The competitiveness of the countries in the service sector is examined for the sub-sectors of the service sector with the help of the Vollrath- Revealed Competitiveness Index. The relationship between specialization and productivity is examined by using dynamic panel data analysis method by using Vollrath index values and data set of 30 countries for 2000-2015 period. According to the findings obtained from the dynamic panel data analysis, it is seen that previous period productivity, specialization and capital affect productivity in wholesale retail and trade- repair sector of motor vehicles and motorcycles, transportation and storage sector, arts, entertainment and recreation sectors. In the previous period productivity and specialization affect productivity in professional, scientific and technical activities sector, administrative and support activities sector, education sector and human health and social services sectors, while it was found that capital did not affect productivity in these sectors. On the other hand, it has been observed that capital and previous period productivity affect the productivity and specialization has no effect in Information and communication sector. While countries need to increase their productivity in achieving high economic growth targets, specialization and capital are important factors in increasing the productivity factor in the service sector. Keywords: Specialization, Productivity, Vollrath Index, Dynamic Panel Data Analysis