The structure of globalisation is shifting. I would describe this less as a departure from the previous model than as a gradual change in where and how economic value crosses borders. Where goods trade once defined cross-border integration, services—particularly digitally delivered services—are increasingly central to how value is created, exchanged, and governed across jurisdictions. Current institutional assessments suggest that services could drive the next phase of globalisation not because goods trade has become irrelevant, but because the marginal dynamism, scalability, and policy sensitivity of services trade now occupy a distinctive position in the global economy.
Structural momentum in services trade
Services trade has outpaced goods trade for more than a decade, both in cross-border flows and through commercial presence. In 2025, trade in commercial services reached an estimated 27.6 per cent share of total global trade, its highest level since these data became available in 2005. Digitally delivered services, which now represent around 55 per cent of global services exports, grew by 10 per cent in 2025 alone.
This is not a cyclical rebound. In my view, this distinction is important because it points to a structural change in the tradability of economic activity rather than simply another phase of the business cycle. It reflects a structural transformation in what is tradable and how it is delivered. Advances in information and communications technology, accelerated during the pandemic, have rendered previously non-tradable services tradable by reducing the need for physical proximity between supplier and consumer. Cloud computing, remote work infrastructure, and digital platforms have altered the economic geography of services, enabling cross-border provision at scale without the logistical frictions that characterise goods trade.
Business services—encompassing intellectual property charges, computer and information services, and other professional services—have been a key driver of this expansion. Telecommunications, computer, and information services almost returned to their pre-pandemic growth rates in 2024, following exceptionally strong growth during the pandemic. Other business services, the largest services category, rose by 7.1 per cent year-on-year in 2024, exceeding pre-pandemic growth.
Why services matter for the next phase
Several factors distinguish services trade in the current environment and help explain why it may play a disproportionately important role in future globalisation.
Lower exposure to traditional protectionism. Aggregate services trade remains largely unaffected by geopolitical alignment compared with goods trade, partly because it is harder to target with traditional protection tools such as tariffs, quotas, and import bans. This does not mean services are immune to policy risk, but the instruments available to restrict services flows are more complex, often regulatory rather than tariff-based, and therefore less prone to rapid escalation. I think this makes regulatory coherence one of the less visible but more consequential determinants of future trade openness.
Behind-the-border measures as the main constraint. For services, non-tariff measures and domestic regulation are the primary determinants of trading opportunities. This shifts the focus of market access from border measures to regulatory quality, professional recognition, data governance, and competition policy. It also means that incremental improvements in regulatory coherence and mutual recognition can have outsized effects on services trade relative to goods.
Integration with global value chains. Services are increasingly embedded in global value chains as intermediate inputs, from logistics and finance to software, engineering, and data analytics. Between 2011 and 2023, services trade grew faster than goods trade whether measured through cross-border supply or the sales of foreign affiliates. Adding cross-border trade and foreign affiliate activity, trade in services accounts for around 21 per cent of global GDP when double counting is removed. This deep integration implies that improvements in services trade conditions propagate through production networks, affecting competitiveness across sectors.
Digital and AI-enabled scalability. WTO simulations project that artificial intelligence could increase global trade by 40 per cent by 2040, with the largest gains concentrated in digitally deliverable services. AI and automation reduce the marginal cost of delivering many services across borders, from software development and design to analytics, customer support, and professional services. This scalability is particularly relevant for smaller economies and firms that can access global markets without the capital intensity traditionally associated with goods exports.
Institutional and policy context
The institutional framework for services trade is both a source of opportunity and a constraint. The General Agreement on Trade in Services (GATS) was designed for an era in which services were less tradable and less central to global value chains. The rising importance of services trade, with behind-the-border measures as the main determinant of market access, introduces challenges in negotiating market access that were not present with the General Agreement on Tariffs and Trade (GATT).
Divergent approaches to privacy, cybersecurity, competition, and AI governance can increase trade costs and generate interoperability, accountability, and strategic issues, creating new kinds of cross-border policy spillovers. At the same time, plurilateral initiatives on services domestic regulation and electronic commerce indicate that members are experimenting with more targeted forms of cooperation within the WTO framework.
WTO modelling suggests that a strengthened multilateral framework, including new disciplines in digital trade and services, could raise global GDP by 2.9 per cent and global exports by 17.9 per cent by 2050 relative to a baseline trajectory. High-income economies stand to gain substantially in absolute terms, with projected GDP gains of about US$ 1.7 trillion in 2023 dollars, reflecting in particular the benefits of lower trade costs in services. For least-developed countries, which currently account for less than 1 per cent of world trade, the gains could be particularly significant, with GDP projected to increase by 7.7 per cent under such a scenario.
These figures do not constitute forecasts. They illustrate the order of magnitude of the opportunity cost associated with failing to modernise the rules that govern services trade in a digital, interconnected economy.
Distributional and strategic considerations
Services-led globalisation will not unfold uniformly. Cross-border services trade has expanded steadily, with the strongest growth in high-income economies, where the ratio of total services trade to GDP rose from about 11 per cent in 2005 to nearly 18 per cent in 2023. A significant share of digital services trade is recorded through a small group of conduit jurisdictions, indicating concentration in both routing and intermediation.
At the same time, services activity is expanding much faster in some emerging markets than in developed economies, primarily due to strong growth in China and India. Services sentiment indicators show India and China powering ahead, while the UK, eurozone, and Russia remain below expansion thresholds. This divergence suggests that the next phase of services-driven integration may be characterised by multiple poles of dynamism rather than a single dominant centre.
From a strategic perspective, it is reasonable to observe that economies investing in digital infrastructure, skills development, and regulatory quality are better positioned to capture the gains from expanding services trade. Complementary investments in these areas can help countries better integrate into services value chains and reduce the trade costs that currently disadvantage smaller and less-developed economies.
Constraints and uncertainties
Several constraints temper the outlook. Global services trade growth is set to ease in the near term, in part reflecting rising travel and transport costs due to higher fuel prices. Geopolitical disruptions have persisted, affecting shipping routes and freight costs, which indirectly impact services tied to logistics and travel. Regulatory fragmentation in areas such as data localisation, AI governance, and cybersecurity could raise compliance costs and limit the scalability of cross-border services.
It is increasingly evident that the multilateral trading system is at a critical juncture, with members recognising that the status quo is not an option but struggling to agree on how to update rules on services, digital trade, and development. The suspension of the WTO Appellate Body since 2019 has weakened enforcement, even as dispute settlement continues through panels and mutually agreed solutions.
These dynamics do not negate the potential for services to drive the next phase of globalisation. They underscore that the trajectory will depend on the interplay between technological change, regulatory choices, and the willingness of members to adapt multilateral cooperation to a more integrated, multipolar, and diverse global economy.
Strategic framing
Viewed through an institutional lens, services trade represents both a continuation and a transformation of the globalisation process. It continues the long-term trend of declining trade costs and deepening cross-border interdependence. It transforms the nature of that interdependence by shifting value creation toward intangible, digitally enabled, and regulation-sensitive activities.
Current institutional assessments suggest that the marginal contribution of services to future globalisation will depend less on traditional market-access negotiations and more on regulatory coherence, digital infrastructure, and the capacity of firms and workers to participate in services value chains. It is not difficult to imagine that economies which align their domestic reforms with these realities will be better positioned to benefit from services-led integration, while those that do not may find themselves increasingly marginalised in a services-centric global economy.
This process may gradually contribute to a form of globalisation that is less visible in container volumes and more evident in data flows, professional networks, and intangible value chains. Several international observers appear to agree that this shift is already underway, even if its full implications for growth, employment, and governance remain to be realised.
The question is not whether services will matter for future globalisation. I would frame the issue more narrowly: whether institutions can adapt quickly enough to the economic reality that services already play a central role in shaping. They already do. The question is whether the institutional and policy framework will evolve quickly enough to allow services trade to realise its potential as a driver of resilient, inclusive, and rules-based integration.
