6

**Table 1:** _Turkey’s trade in goods and services as percent of GDP in regional perspective in 1991-98 and 1999-2004 (in percent)_

||Trade in G&S a<br>|s % of GDP<br>|Exports of G&S<br>|as % of GDP<br>|
|---|---|---|---|---|
|Country/Group|1991-98|1999-04|1991-98|1999-04|
|Turkey|42.2|57.4|19.2|27.5|
|Bulgaria|95.0|114.3|47.4|53.3|
|Croatia|105.0|99.5|49.4|46.1|
|Romania|56.3|72.3|25.1|33.1|
|**Memorandum:**|||||
|SEE-4 (simple average)|75.4|76.6|24.2|27.0|
|EU-8 (simple average)|103.6|119.0|50.7|56.9|
|of which: Poland|49.2|55.4|24.2|25.2|

SEE-4 includes Albania, Bosnia and Herzegovina, Macedonia and Serbia and Montenegro; EU-8 Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. Source: Computations are based on World Bank WDI data base through SIMA and Turkey’s Balance of Payments statistics for 1999-2003.

Fourth, in 1985-2004 Turkey’s trade in goods and services has been persistently in the red except for three years—1988, 1994 and 2001 due to deficits in trade in goods. Revenues from exports of goods and services amounted on average to 89 percent of expenditures on imported goods and services in 1990-97 and 92 percent in 1998-2004 (Table 2). The surplus in 2001 affects the average for the last period—excluding 2001 the ratio would be 87 percent. This has been exclusively due to services, which have been a very large net foreign currency earner, with the surplus reaching US$ 13.5 billion in the peak year of 1998 and 12.8 billion in 2004. Surpluses in trade in services have significantly offset chronic deficits in trade of goods. Over 1998-2004, cumulative surpluses in services amounted to 92 percent of cumulative balances in trade in goods. Surplus in services covered 62 percent of a shortfall in goods trade in 2004.

**Table 2:** _Developments in trade in goods and services in selected years (in billion of US dollars and percent)_

||||||||||||Least Squ|are Grow|th(%)|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||1991|1996|1997|1998|1999|2000|2001|2002|2003|2004|1991-98|1999-04|1985-04|
||||||**(in$ bi**|**llion)**||||||||
|Exports of goods|13.7|32.1|32.1|30.7|28.8|30.7|34.4|40.1|51.2|66.9|14.1|16.8|<br>10.2|
|Exports of services|8.4|13.4|19.9|23.9|16.9|20.4|16.1|14.8|19.1|24.0|14.4|4.2|<br>10.3|
|Imports of goods|20.9|42.3|47.2|44.7|39.0|52.7|38.1|47.4|65.2|90.7|12.4|14.5|<br>9.9|
|Imports ofservices|3.2|6.8|9.0|10.4|9.4|9.1|6.9|6.9|8.6|11.3|17.4|2.1|<br>11.1|
||||||**(inper**|**cent)**|||||Aver|age Shar|e|
|Service exports in<br>total trade|72|66|69|70|64|69|70|68|69|68|71|68|<br>70|
|Services in total<br>exports|38|30|38|44|37|40|32|27|27|26|36|30|<br>32|
|Service exports in<br>% of imports|260|198|221|230|180|225|232|214|222|213|252|214|<br>238|
|Total exports in %<br>of imports|91|93|93|99|94|83|112|101|95|89|108|105|<br>107|

Source: Based on IMF Balance of Payments Statistics through World Bank WDI database.

Fifth, notwithstanding the continuing importance of exports of services as a source of foreign currency earnings, the loss of momentum in their growth in 1998-2004 is rather bewildering. While the value of their exports increased more than eight times between 1985 and 1998 and in terms of GDP doubled, exports of services stagnated in 1998-2004. Their share in total exports fell from 44 percent in 1998 to around 27 percent in 2002-04 (Table 2). This was in large part due to a very strong, double-digit growth of exports of goods.

To sum up, the level of integration of Turkey into global economy has significantly expanded over the last two decades. It is high both in terms of trade in goods and services as well