Digital Services Trade

For the past 40 years or so, developments of information and communication technology (ICT) have transformed much of the way producers and consumers connect with each other. ICT reduces costs of distance between producers and between producers and consumers. This has resulted in the fact that international trade has grown faster than before.

Only a short while ago, it was simply unimaginable to export services. Thanks to new technologies and ICT, services have become tradable and, moreover, have hugely expanded the scope of exports and imports. Nowadays, services represent around 23 percent of total cross-border trade. Moreover, the figure below illustrates that trade in services has grown faster than trade in goods.

However, the figure also shows that digitalization finds its strongest effect in digital services trade. Indeed, a more impressive growth rate is observed for digital services themselves. Since 1995, this type of digital flow grew with a factor of more than 5! With the current trend of digitalization, it is very likely that these trade patterns will not just continue but even accelerate.

Ultimately, this will rapidly change the way we perceive globalization. The digital economy is moving fast, and a large part of future trade and growth lies in this digital area.