The services sector contributes significantly to global growth. The sector, which constitutes more than two thirds of the global GDP, is also the sector in which most workers are employed in developed economies and the most jobs are created in services. Services also provide more than 50% of the gross export value added and more than 30% of the value added of industrial goods exports (OECD, 2019). In this respect, the services sector continues to be an important sector for world economy.
In Turkey, services also constitute more than 50% of GDP, more than half of total employment also located in this sector. Turkey exported services worth USD 47.8 billion, its services imports USD 23 billion in 2018. The biggest contribution to exports in services is travel services, while the largest share in imports is in maritime transport services.
There are many studies demonstrating the positive effect of services trade liberalization on production and trade. Reducing the restrictions on trade in services in the world also positively affects productivity and competitiveness in the services sector. Services Trade Restrictiveness Index (STRI) was developed by the OECD in 2014 in order to measure the degree of restriction on services trade. It is aimed to provide information to decision makers and investors by introducing the restrictive effects of country-level regulations on trade in services. It helps the development of international trade negotiations and thus the development of international trade in services. In addition, the STRI encourages policy-makers in countries to make reforms on priority sectors and measures to be taken. The index, conducted in 45 countries and over 22 sectors, which account for more than 80% of global trade in services, also provides the possibility of cross-country comparison.
According to the OECD STRI results, the top ten countries with the most open markets for services trade are Latvia, Ireland, Germany, the Netherlands, Australia, Lithuania, Denmark, Japan, the United Kingdom and the Czech Republic. Norway has been the country that has realized the most significant liberal policies. In terms of sector reforms, Mexico in telecommunication, China in rail transport, and Japan especially in logistics services especially customs brokerage have taken significant steps.
Following table presents the sector average of countries in the STRI and Turkey’s score. The value of the index varies between 0 and 1, and 1 represents the highest constraint. Accordingly, Turkey has a lower score on the STRI than the average in eight out of 22 sectors. These are telecommunication, maritime transport, rail transport, road transport, distribution services, commercial banking, insurance and engineering services. This shows that significant reforms have been made in these sectors regarding the entry of foreigners into the market. Rail transport, distribution services and maritime transport are also the services with the lowest three scores compared to the average of other countries. On the other hand, accounting, courier and legal services have the highest score compared to country averages in the index. These sectors include more restrictive measures than the others, and they need regulatory reforms.
Table. Services Trade Restrictiveness Index , 2018
| Turkey | Average | Turkey | Average | ||
| Accounting | 1.00 | 0.32 | Road Freight Transport | 0.24 | 0.30 |
| Courier | 0.47 | 0.30 | Architecture | 0.27 | 0.26 |
| Distribution | 0.17 | 0.19 | Engineering | 0.24 | 0.25 |
| Commercial Banking | 0.23 | 0.24 | Legal | 0.61 | 0.39 |
| Insurance | 0.22 | 0.23 | Motion Pictures | 0.23 | 0.22 |
| Logistics Cargo Handling | 0.36 | 0.26 | Broadcasting | 0.40 | 0.30 |
| Logistics Storage and Warehouse | 0.31 | 0.24 | Sound recording | 0.24 | 0.20 |
| Logistics Freight Transport | 0.28 | 0.20 | Telecom | 0.21 | 0.22 |
| Logistics Custom Brokerage | 0.28 | 0.25 | Air transport | 0.55 | 0.42 |
| Construction | 0.25 | 0.24 | Maritime transport | 0.24 | 0.26 |
| Road Freight Transport | 0.21 | 0.22 | Computer | 0.28 | 0.25 |
Source: OECD
Restrictions on trade in services are one of the obstacles to the increase in exports of services. Increase in costs may stem from domestic producers as well as domestic policies. Both consumers and firms pay the cost. Consumers have to consume high-priced products, while firms can postpone their innovation activities to future periods. Restrictiveness also reduces the effectiveness of competition in these sectors. In Turkey, especially, accounting services, courier services, legal services, broadcasting and air transport are needed to reduce restrictions in terms of the development of international trade. In the international context, strengthening inter-country cooperation for the reduction of commercial costs, ensuring mobility of professionals in this area, and greater openness in the digital economy will contribute to the development of trade in services trade, and increase the competitiveness.