Determinants of Turkey's services exports

The services sector, whose share in national and international trade is increasing day by day, is shown as one of the sectors that provide the main source of income in the world economy. Foreign trade in services, which has a dynamic role in the Turkish economy, plays an important role in balancing the current account. In this study, the relationship between Turkey's services exports and the real exchange rate index, industrial production index, services sector confidence index and the industrial production index of the European Union is analyzed with monthly data for the period 2011:01-2023:06.In the study, firstly, the stationarity of the series is analyzed by using conventional unit root test and unit root tests with structural breaks. Then, ARDL bounds test is used to investigate the existence of cointegration relationship between the series. Finally, long-term and short-term coefficient estimation results are obtained. According to the results, a one-unit increase in the industrial production index of the EU in the long term has a positive effect on Turkey's services exports. However, the real exchange rate index, Turkey's industrial production index and Turkey's service sector confidence index do not affect services exports in the long term. Moreover, according to the short-term estimation result, short-term deviations reach the long-term equilibrium after 3.28 periods. According to these results, the most important factor affecting Turkey's services exports is the economic performance of the European Union.