The Global Economy’s Next WinnersJuly/August 2019 125
factors, such as access to resources, the speed at which Ãrms can get
their products to consumers, and the skills available in the work force,
are more important. Companies are building fully automated facto-
ries to make textiles, clothes, shoes, and toys—the labor-intensive
goods that gave China and other developing countries their start in
global manufacturing. Exports from low-wage countries to high-wage
countries fell from 55 percent o all exports o those kinds o cheap,
labor-intensive goods in 2007 to 43 percent in 2017.
... THIS IS NOW
Trade in goods may be slowing relative to global economic growth,
but trade in services is not. Since 2007, global trade in services has
grown more than 60 percent faster than global trade in goods. Trade
in some sectors, including telecommunications, information technol-
ogy, business services, and intellectual property, is now growing two
to three times as fast as trade in goods. In 2017, global trade in services
totaled $5.1 trillion, still far less than the $17.3 trillion o goods traded
globally. But those numbers understate the size o the services trade.
National accounts do not, for example, separate out R & D, design,
sales and marketing, and back-oce services from the physical pro-
duction o goods. Account for those elements, and services make up
almost one-third o the value o traded manufactured goods. And
companies have been turning more and more to foreign providers for
those services. Although directly measured services are only 23 per-
cent o total trade, services now account for 45 percent o the value
added o traded goods.
Trade in services will take up an ever-greater share o the global
economy as manufacturers and retailers introduce new ways o pro-
viding services, and not just goods, to consumers. Car and truck man-
ufacturers, for example, are launching partnerships with companies
that develop autonomous driving technologies, rent out vehicles, or
provide ride-hailing services, as they anticipate a shift away from the
traditional model o one-time vehicle purchases. Cloud computing
has popularized pay-as-you-go and subscription models for storage
and software, freeing users from making heavy investments in their
own hardware. Ultrafast 5G wireless networks will give companies
new ways to deliver services, such as surgery carried out by remotely
operated robots and remote-control infrastructure maintenance made
possible by virtual re-creations o the site in question.