How can we overcome barriers and leverage technology to shape the future of global services?

Over the past two decades, services have become a dominant force in the global economy, representing about two-thirds of global output and an even higher share in high-income countries.

In some advanced economies, such as the United Kingdom, the United States and Singapore, services account for four out of five jobs.

This shift is mirrored in trade and investment, with services comprising two-thirds of global foreign direct investment and growing twice as fast as goods trade, driven by technological innovation and evolving demand patterns.

However, barriers to trade in services remain high, with rising protectionism in many areas. Price disparities across countries suggest significant gains from globalizing services. High service costs in sectors such as education, health and insurance reduce living standards, while expensive intermediates, including logistics and finance, weaken manufacturing and agriculture.

Efficient and innovative services are essential for addressing challenges such as the green energy transition and smart urbanization.

Despite the rapid growth of services, trade policy remains goods-focused, with slow, fragmented progress on reducing barriers to services trade and investment. Services are often misunderstood, leading to ineffective “cut-and-paste” approaches from goods trade policies.

Unlike goods, service value chains are intangible, highly varied, and often consumed and produced simultaneously. They require tailored policies and inter-ministerial coordination across trade, tax, investment and labour regulations.

A new opportunity has emerged to improve approaches to services trade. At the World Trade Organization’s 13th Ministerial Conference, 72 countries committed to simplifying service regulatory procedures through the new Services Domestic Regulation disciplines.

Additionally, services-specific agreements such as the Digital Economic Agreements and the Berne Financial Services Agreement offer valuable insights. Key lessons include:

Focusing on sector-specific approaches, industry engagement and regulatory exchanges can help achieve policy goals in a trade-efficient and future-proof way.

Private and public sector collaboration at the sectoral level is crucial to shaping the future of global services. Key sectors such as ICT, finance and transport deserve special attention, as they support nearly all economic activities.

And when broadly defined, tourism is the world’s largest economic sector and a major source of employment, particularly for women and indigenous people. This is why the World Economic Forum, in partnership with Saudi Arabia’s National Competitiveness Centre, is focusing on these four sectors through the Streamlining Services Initiative.

For more, we asked three leaders to share how their respective sectors are crucial for world trade. Here's what they had to say:

Financial services provide two critical roles for global trade. First, they enable production and the movement of physical goods. It is estimated that some 80-90% of world trade relies on trade finance, including trade credit and insurance.

Second and sometimes overlooked, they are vital as an item of trade themselves. Removing barriers to cross-border financial service flows, such as by mutual recognition of legal and supervisory standards, is, therefore, a critical step in financing more trade and trading more finance, delivering economic growth and long-term prosperity.

Major steps have already been taken across the developed world, particularly in Europe and North America, to liberalize the flow of financial products and data exchange. There is huge potential to do this in other regions, especially as major economies like India and China continue to open internationally.

The Regional Comprehensive Economic Partnership and agreements signed through the Association of Southeast Asian Nations aim to free up services trade within Asia and Australasia. They will further empower regional trade hubs such as Hong Kong and Singapore.

Politicians and policymakers must continue to deepen these agreements to lock in the benefits of cross-border activity. Alongside policymakers’ actions, financial institutions, including Standard Chartered, are continuing to innovate to foster greater financial services trade.

They are pioneering the use of blockchain to make trade finance, payments and other key products more transparent, safer, cheaper and more widely available to clients.

ICT services are one of the most dynamic components of work trade, representing over 10% of cross-border exports. Yet, the most significant role ICT has played is to enable a wide range of service exports that previously required commercial presence to be traded via ICT networks.

ICT allows a wide range of services, including financial services, professional services, education and health to be delivered digitally. Electronically delivered services represent two-thirds of service exports.

By eliminating borders and distance from trade, they also allow micro-, small- and medium-sized enterprises that typically cannot afford high transport and customs costs to serve consumers worldwide.

Despite the economic promise of ICT and ICT-enabled trade, the regulatory environment is becoming more restrictive and globally fragmented. For example, the number of regulations affecting the cross-border movement of data has grown more steeply since 2010.

Data is the lifeblood of the digital economy. A new generation of Digital Economy Agreements, spearheaded mainly by Asian and Pacific countries, is expanding globally. In Africa, the Services and Digital Protocols under the African Continental Free Trade Agreement may expand the recent trend towards liberalization of ICT in a number of African countries.

Other forms of collaboration, such as the European Union (EU)-United States and EU-India Trade and Technology Councils, should be considered models for collaboration on a wide array of issues related to digital governance and digital connectivity.

Public-private dialogue and the promotion of these initiatives can help advance a shared understanding of good practices and reduce digital policy protectionism and fragmentation.

When considering all modes of transportation that contribute to the bustling global tourism industry, it’s noteworthy that an estimated 58% of all international tourists travel by air. Hence, the aviation and tourism sectors are interdependent for continued sustainable growth.

Developing countries are investing more in the tourism market and becoming more competitive, most notably in the Middle East and Asia-Pacific. Yet restrictive visa requirements can impede international travel for tourism purposes.

These entry requirements that can hinder their tourism sector growth and reduce economic opportunities and employment are often self-imposed.

According to 2018 UN World Tourism Organization data, from 2008 to 2018, destinations without visa requirements have only increased from 17% to 21%, signalling an area of improvement.

According to Boeing, passenger belly cargo typically accounts for 54% of world air cargo capacity.

Many developing countries depend on tourism for this critical air cargo capacity that supports trade and links their economies to the global supply chain.