Everyone who stops to think knows that trade in services is under-counted. Services do not go through customs points in ports and airports and do not have measurement systems honed over centuries. But like the drunk who was looking for his keys not where he dropped them, but where there was light, we all have a tendency to talk about trade using only data on goods trade, because that is what is available. I’ve done it myself, despite having worked on services trade since the 1980s.
That is what caught my eye in this little piece on how to explain why international trade (in goods) appears to have flattened out. The full story is worth reading because it addresses even the issue of advertising-supported “free” services that are supplied by firms in one country and consumed in another.
There’s another possible explanation that I keep wondering about, though: Maybe people just don’t need as much stuff as they used to. A new report from the McKinsey Global Institute — from which the first chart is taken — makes a related argument. Global economic interaction, the McKinseyites write, is going virtual:
Flows of physical goods and finance were the hallmarks of the 20th-century global economy, but today those flows have flattened or declined. Twenty-first-century globalization is increasingly defined by flows of data and information.
So globalization isn’t done for. It’s just going to look different going forward.