Rethinking what services trade is really worth

Trade in services is no longer a sideshow in global economy.

The real value of services trade lies not in figures, but in what it delivers for employment, productivity and development quality.

This message is conveyed by the United Nations Conference on Trade and Development (UNCTAD) in its most recent technical report.

The report, "Measuring servicification and impacts of services trade and policy," frames services as the connective tissue of the modern economy.

Services already account for more than half of economic activity in developing countries and almost half of employment, according to UNCTAD's analysis of World Bank data.

More importantly, services are increasingly "embedded" in other sectors—a phenomenon the report calls "servicification": the rising share of services in the input mix of agriculture, mining and manufacturing, alongside "servitization", where goods producers bundle services into their offerings or even sell the service a product provides rather than the product itself.

The scale of this integration is easy to underestimate.

Services embodied as intermediate inputs in traded goods account for roughly one-third of the total value of global goods trade, based on OECD Trade in Value Added data cited in the report.

Firm-level surveys suggest in-house service use in manufacturing can amount to as much as half of total costs—far above what conventional trade statistics capture.

Digitalization is accelerating both trends.

UNCTAD estimates digitally delivered services grew 7% annually in value terms between 2015 and 2024, outpacing goods trade's 4% compound annual growth over the same period.

The report's first key finding challenges the traditional yardstick.

Judging services trade by export value and growth alone misses the point, UNCTAD argues—what matters is whether it generates development outcomes such as jobs, wages, productivity, firm performance and industrial upgrading.

The evidence supports this: manufacturing firms that bundle services with their products are more productive and participate more deeply in global value chains, while services sector labour productivity in developing countries has been rising steadily, narrowing the gap with developed economies.