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STRUCTURAL TRANSFORMATION IN TURKEY IN THE CONTEXT OF SECTORS

The aim of this study is to investigate the relationship among agriculture, industry and services sectors in Turkey, in the context of structural transformation. Applying ordinary least squares method, this study examines whether there is a distribution of resources in favor of one sector or there are complementarities among sectors in Turkey for the period 1923-2006. In other words, Turkeys development pattern is investigated. According to the results of the study, Turkey transferred resources from agriculture to industry and services. Thanks to the growth of services, industrialization accelerated. However, industrialization did not result in growth of services. Moreover, while industrialization was realized as a goal by transferring resources from other sectors, on the other hand, the years in which the industry contributed the most to growth were quite few. Until the 1960s, agriculture provided the highest contribution to growth and after the 1960s, services. The reason for the low contribution of the industry may be that the resource transferred to this sector due to diminishing returns causes a decrease in productivity. From this point of view, policy makers should design policies to prevent the decrease in productivity in the industry. In other words, the contribution of industrialization to growth will increase when the decision maker takes decisions in a way that will enable the emergence of positive externalities that will compensate for the diminishing returns during the industrialization process. According to the findings of the study, it is understood that policies that would achieve positive externalities could not be produced within the relevant period. The recommendation of the current study is that the same analysis should be done in sub-periods.