Trade in services: The elasticity approach for the case of Turkey

This study includes the analysis of global trade in the services and service sector in Turkey, and estimates the elasticity of trade in services to real exchange rates and income. There is an increasing role of the service sector in the Turkish economy; however, a decreasing trend of trade in services is taking place. The commitments of the GATS were found to be ineffective, at least in the case of Turkey. The empirical findings suggest that the real exchange rate is not a significant determinant for the trade in services. We found an inelastic real exchange rate and income elasticities in trade demand functions. However, the value of income elasticity significantly exceeds the value of real exchange rate elasticity.