Liberalization of international trade in services and effects of that on developing countries: An application on Turkey

Services sector was ignored from physiocrats to classical economists ineconomics theory. Studies of neo-classical economists had the importance of servicessector revealed. Modern approaches have stressed how services sector is critical foreconomy. Though services have different structure from goods, classical and modernforeign trade theories with some new interpretation can explain international trade inservices.Today, international trade in services equals almost 24 per cent of internationalmerchandise trade. While developed countries have almost 75 per cent of worldservices? export, developing countries have a share of 25 per cent solely. In addition torevealed comparative advantages, specific conditions and shares of countries in trade inservices are important for benefits from liberalization of international trade in services.Liberalization in the context of GATS will negatively affect many developing countriesincluding Turkey in trade in services, excluding travel services sector. Liberalization intrade in services will change some parameters of developing countries such as economicdevelopment, employment, productivity, national income, balance of currenttransactions and some other economic and social variables.In spite of all negative effects, Turkey and other developing countries may havesome comparative advantages not only in travel services sector but also in others, byfocusing on physical, human, technological, and informational infrastructures. It isimportant for these countries to insist on fair liberalization of international trade inservices in WTO and to cooperate in negotiations.