Global trade is turning to services, unevenly

Globalization has long been characterized by the movement of goods. Physical products can be shipped readily across borders, while many services traditionally required the customer and provider to be in the same place. Digital technology is changing that distinction.

Global services exports reached about $9.7 trillion in 2025, up 8.3% in a year and nearly double their value a decade earlier, according to UN Trade and Development (UNCTAD) data. What countries sell abroad is changing alongside how they sell it. Software, financial services, architectural designs and professional expertise can now reach foreign customers digitally, allowing economic activity once constrained by distance to cross borders almost instantaneously.

Digitally traded services could create new routes into global markets for countries long disadvantaged by geography. But the gains have been highly concentrated, potentially widening the divide between economies able to export knowledge-intensive services and those reliant on tourism, transport and other traditional sectors.

The trade that does not arrive in a container

The fastest growth has come from services that can be traded entirely online. The World Trade Organization’s (WTO) Global Trade Outlook and Statistics, published in March 2026, puts digitally delivered services exports at $5.26 trillion in 2025, equivalent to about 15% of all global trade in goods and services. The category includes financial and business services, computing, entertainment and education delivered through computer networks.

The expansion predates the latest surge in digital trade. The WTO and World Bank’s 2023 Trade in Services for Development found that commercial services exports almost tripled between 2005 and 2022, while digitally delivered exports almost quadrupled.

Headline export figures also understate how deeply services are already embedded in global trade. A manufactured product may be recorded as a goods export even though services such as design, software and logistics account for part of its final value.

When trade is measured according to where that value is created rather than according to the final product crossing the border, the same WTO and World Bank study found that services account for about half of global trade.

A different path into world trade

For developing economies, services raise a larger question about how countries climb the global economic ladder.

Export manufacturing provided one route, allowing economies to use relatively inexpensive labor to produce goods for wealthier markets. Services potentially reduce some of the disadvantages faced by countries far from large markets because the cost of sending computer code abroad bears little resemblance to the cost of shipping a container.

There are signs that developing economies are gaining ground. Their share of global services exports rose from 23.5% in 2005 to around 35% in 2022, according to Trade in Services for Development. By 2025, China alone exported $508 billion in services, ranking fifth globally, according to UNCTAD.

But the aggregate disguises an extraordinary concentration. China, India, Singapore, the United Arab Emirates and Türkiye, the five largest services exporters in the developing world, accounted for 57% of developing economies’ services exports in 2025. Together, they captured 17% of the global market. Remove the five leading exporters from the calculation, and many developing economies lost global market share over the previous decade.

The divide also runs through the types of services countries sell. Knowledge-intensive activities such as computing, telecommunications, finance and professional services can be exported repeatedly to distant markets without moving people or physical products. Tourism and transport remain far more dependent on geography, infrastructure and movements of people and goods.

The digital divide becomes a trade divide

The countries furthest behind show the limits of services as an automatic route to development.

UNCTAD’s Least Developed Countries Report 2025 found that least developed economies exported just $8.1 billion in digitally deliverable services in 2024. That represented only 0.16% of the global total, the lowest share since records began. 

Developed economies, by comparison, exported $3.8 trillion and captured 76.4% of the market.

The composition of exports from least developed economies remains markedly different as well. Travel and transport together accounted for 68.5% of their services exports. Their combined share of global exports in even those two sectors was only 1.1%.

Digital trade may remove the need for a coastline or proximity to a rich consumer market, but it creates its own requirements. Reliable electricity and broadband connections are only the beginning. Countries need workers with technical and professional skills, firms capable of reaching foreign clients, access to finance, regulatory systems that support international business and qualifications that customers abroad recognize.

The countries that overcome those barriers can enter markets that were once difficult to reach. Those that cannot risk watching another major expansion of global trade pass them by.

A new geography of globalization

The services boom does not mean manufacturing is disappearing. World merchandise exports were still worth $26.26 trillion in 2025, almost three times commercial services exports, according to the WTO’s March 2026 outlook.

Instead, the distinction between a manufacturing economy and a services economy is becoming less useful. Factories depend on services such as logistics, software and finance, which can themselves be traded internationally.

More important are the capabilities that allow firms to trade without moving a physical product. A country with weak transport links may face fewer geographical disadvantages when exporting software than when exporting manufactured goods, but success still depends on its ability to produce workers and firms capable of competing internationally in high-value services.

Services therefore offer developing economies a route into global trade, but not necessarily an easier one. Geography once determined how cheaply a country could move goods to the world. In the services economy, the decisive distance may be less about how far a country lies from a port than how far its workers and firms remain from the digital, educational, and institutional networks through which knowledge is traded.