Structural change, productivity and competitiveness in the service sector of Turkey

One of the structural changes emerging in advancing and changing economies during economic development is that the share of service sector in the economy increases rapidly in terms of production and employment. A similar progress has been observed in Turkish economy. The share of service sector in the economy increased from 32% in 1960s to above 64% in recent years. Despite advancements and changes in the service sector, service sector of Turkish economy has not been examined sufficiently due to measurement problems resulting from the nature of service sector. For this reason, the purpose of this study is to examine the evolution and dynamics of service sector in Turkish economy. For this aim, firstly, the service sector in Turkey is examined descriptively with respect to production, employment, productivity and foreign trade for the years 1960-2014. Secondly, the structural change in the service sector has been investigated, and the impact of structural change on the productivity of service sector has been explored. Finally, the competitiveness of the service sector in Turkey and in selected countries is investigated by Constant Market Share analysis. In this study, World Bank's, UN Service Trade's and TUIK's data for the service sector have been used.