Trade in Services

Services are the backbone of economic activities. They account for the majority of global GDP and employment, and their role in international trade has grown rapidly with the advances in information technology and globalization. This chapter outlines the definition and key features of services, explains how they are traded under the General Agreement on Trade in Services (GATS), and reviews the main drivers of services trade such as technological advancements, trade liberalization, and global value chains. It also discusses firm-level evidence showing that service traders are typically larger, more productive, and more resilient to economic shocks than goods traders. The chapter concludes with a debate about the broader implications of services trade for employment, aggregate productivity, and complementarity with goods trade. Open questions for future investigations are proposed.