Impact of Digital Technologies and the Fourth Industrial Revolution on Trade in Services

October 12, 2020

Digital technologies are cutting trade costs for services, turning more services from non-tradables into tradables, and putting trade in services on a stronger relative growth path than trade in goods. Digital enablement of services depends on inputs of cross-border data flows, which are themselves growing exponentially. The shift to the digital economy has intensified during the COVID-19 pandemic as goods producers connect with customers via online platforms, and services like health, education, and entertainment are delivered online.

 

 

Purchasing services offshore is not far behind, so e-service trade will likely continue to accelerate. However, regulatory frameworks are lagging, putting productivity gains at risk. We offer eight recommendations to the Group of Twenty (G20) leaders to start shaping a trade policy agenda for a digital future. For every nation to reap the benefits of the Fourth Industrial Revolution, sustained openness to international services trade, investment, and data flows is essential.