The development of service sector in Turkey and its effect on economic growth

In this paper, the effect of the service sector on economic growth has been studied. Service sector, historically, has been developed as an important part of structural change which is seen at sectors during economic development phases. It is seen and experienced that service sector in Turkey is getting bigger more than the other sectors and increasing its share in the whole economy in last 20-30 years pursuant to general world trend. In the study, the effects of sectors? structures and shares on economic growth have been analysed by focusing on service sector. According to results of time series analysis method in which VAR and causality tests were used with 1968-2006 period data, the agriculture and service sectors have influence on economic growth and they are also influenced by economic growth. Like agriculture sector, service sector has also employment and income creating capacity. These make service sector become the biggest sector in the economy. According to empirical results, there is no meaningful relation between industry sector and economic growth, since employment increase is so expensive in industry sector and it is also so diffucult because of the mechanization and automation.