Dig Deeper: Digital Trade Is Globalization’s Next Level

Watch “Globalization for Fun and Profit: The Digital Gaming Economy”

In fact, according to the World Trade Organization, global exports of digitally delivered services increased more than fourfold between 2005 and 2023, hitting $4.25 trillion that year. So-called information and communication technology services—cloud computing, network security, e‑conferencing, and so on—increased more than fivefold from 2005 to 2022 (Figure 1). Digital trade has surged even further since then.

Data flows show even more growth. The United Nations Conference on Trade and Development’s Digital Economy Report 2024 adds that global data traffic “saw a fourfold increase from 2018 to 2022” and “the volume of global data traffic is forecast to grow by a factor of 2.5 by 2029, reaching 1,223 exabytes per month.” Measuring cross‐​border data flows is difficult, but the most commonly used measure—total used capacity of international internet bandwidth—has expanded more than sevenfold between 2015 (153 terabits/​second) and 2022 (1,126 terabits/​second) (Table 1).

As noted, much of this digital trade is traditional services like communications or accounting, but an increasing share is novel—not only video games and streaming media but also what Middlebury College’s Gary Winslett calls “Peloton globalization,” in which leisure activities such as taking a Peleton class can now be broadcast and consumed abroad. Combined with Zoom meetings, virtual worlds, and other new online technologies, our digital universe would in many ways be unrecognizable to people just a few short decades ago.

Just as important, current estimates of worldwide digital trade and related economic activity are likely understated because traditional statistics have difficulty capturing the origins, volume, and value of cross‐​border digital transactions—especially software downloads and video games’ virtual goods and currencies. Thus, a McKinsey Global Institute report calculated that global data flows in 2014 alone generated $2.8 trillion in mostly hidden economic output and were “doing more to benefit the world economy than the stalling international trade in physical goods.” Digital transactions are much more prevalent today, yet trade statistics still fail to fully capture them. So, if digital trade activity hypothetically experienced the same 739 percent increase that international bandwidth experienced between 2015 and 2022, then the true value of those transactions would approach $21 trillion—almost as large as worldwide trade in goods in 2021 ($22.4 trillion)!

That number is, of course, just a hypothetical. But it’s still useful to show what anyone with a smartphone or gaming console already knows: While claims of “de-globalization” might get all the press, actual globalization—especially online—continues to expand and enrich our lives in new and exciting ways.

Watch “Globalization for Fun and Profit: The Digital Gaming Economy”