10 travel and transport; although the latter’s poor performance remains unanswered. It is not clear what explains volatility and collapse in their trade. It remains unclear whether unusual patterns in Turkish trade in services are simply a statistical mirage or they reflect deeper structural barriers to this trade. Given its performance in trade in goods, one is tempted to blame the quality of statistics rather than idiosyncrasies of Turkey’s mode of integrating into global economy. Whatever the answer might be, it needs to be found simply because services statistics provide important inputs to economic policy making.

# **C** **_._** _Trade in goods and services in comparative perspective: expanding aggregate trade openness_

Looking solely at trade turnover per capita does not provide a good base for an assessment of a country’s involvement in world trade (Figure 3). Turkey’s trade turnover per capita in 2004 puts it close to the bottom of EU-8, SEE-3 and EU candidate economies. It is higher than only trade turnover per capita of Macedonia, Serbia and Montenegro and Albania. On the other hand, however, Turkey’s turnover is pretty close to Romania’s trade turnover per capita. But this is highly misleading, as Turkey’s population is almost double that of the largest country among the EU-8, Poland; more than triple of that of Romania (the second most populous country); and 52 times larger than the least populous, Estonia. Larger population implies a larger domestic economy less dependent on foreign trade.

**Figure 3:** _Trade in goods per capita in Turkey and other ‘EU-related’ European countries in 2004 (in US dollars)_

<!-- Start of picture text --> 16,766<br>13,009<br>11,48910,516 9,979<br>6,304<br>5,460 5,076<br>4,244<br>3,136<br>2,569 2,240 2,220 1,861<br>898<br><!-- End of picture text --> <!-- Start of picture text --> 1,861<br>898<br><!-- End of picture text --> <!-- Start of picture text --> EstoniaLithuania<br><!-- End of picture text --> <!-- Start of picture text --> Latvia<br><!-- End of picture text --> <!-- Start of picture text --> PolandBulgaria<br><!-- End of picture text --> <!-- Start of picture text --> Romania Turkey<br><!-- End of picture text --> <!-- Start of picture text --> Albania<br><!-- End of picture text --> Source: Trade as reported to the UN COMTRADE database and population data from WDI.

In fact, Turkey ranks very high in terms of trade openness and integration into global markets if variables determining a country’s dependence on foreign trade are taken into account. Its actual trade relative to GDP in 2003 exceeded the level generated by an empirical model developed for 149 countries. The model regresses openness, defined as the share of goods in GDP, on the country’s population, distance to major markets and GDP per capita (World Bank 2005). Its results are theoretical or potential shares of goods exports and imports in the GDP. If the potential (predicted) share is below its actual share, then a country ‘under-trades.’ If the reverse is the case, then a country’s involvement in global trade is larger than its size, level of economic development, as proxied by the GDP per capita, and distance to world’s most important markets would indicate.

Turkey like most of new Central European members of the EU (EU-8) appears to be