Our ability to understand the economy has long shaped how we measure value, regulate international trade, and design economic policy. In his latest working paper, Thierry Warin traces the evolution of trade theory and policy from the 1600s to the present, showing how technological, institutional, and economic changes have transformed not just what we trade, but how we trade it.
As current business models increasingly involve intangible products, digitally delivered services, and user data, traditional measurement frameworks struggle to capture the full scope of cross-border economic activity. This shift challenges established concepts of value creation, trade flows, and comparative advantage. It also raises pressing questions about how we measure and regulate trade in the 21st century.
Le problème
Conventional trade theories were built around the exchange of physical goods across borders. Today, services account for a growing share of economic output in many advanced economies, especially the U.S., yet remain much harder to measure accurately.
Consider Apple: its engineers in California design products that are assembled in China using globally sourced components and expertise. Yet customs data captures only the value of the physical product. Royalties may be recorded, but much of the embedded design and intellectual input remains invisible in trade statistics.
Digital platforms further complicate the picture. Companies like Google, Meta, Netflix, and Amazon deliver services globally with minimal physical presence, optimizing their products for advertisers and users using data collected from across the world.
Recherche et résultats
Trade theory has evolved alongside shifts in global modes of production. In the 1600s, mercantilism framed trade as a zero-sum game focused on accumulating wealth through trade surpluses. With industrialization and the advent of rail transport, production scaled up and goods could move across long distances at relatively low cost. Free trade expanded, while services were largely limited to those that supported goods exchange, such as finance, insurance, and shipping.
The French Physiocrats of the 1700s, and later classical economists like Adam Smith and David Ricardo, emphasized productivity, specialization, and mutual gains from trade. Thinkers like Friedrich List, however, argued for temporary protectionist measures to support developing industries. By the 20th century, trade theory had evolved to include factors such as resource endowments, economies of scale, and consumer preferences to better explain the observed patterns in trade.
The dynamics of trade began to shift in the 1990s with the rise of the internet and the liberalization of financial markets. As more services became digitally deliverable, new modes of production and delivery emerged. Traditional trade models, built around the movement of tangible goods, struggled to keep pace. Unlike goods, services are intangible and often delivered without physically crossing borders, making them harder to define, measure, and capture in official statistics.
Advancements in telecommunications enabled multinational firms to separate service functions from manufacturing. Products are now designed in one country and manufactured in another, blurring the line between goods and services. OECD-WTO’s Trade in Value Added statistics, which tracks the value added by each country in global value chains, shows that roughly half the value in manufacturing exports from advanced economies comes from services inputs.
Companies also localize operations to meet the needs of specific markets, especially where services require local licenses. Around 55% of cross-border services are delivered through localized operations, but are recorded as domestic output. Balance-of-payments accounts also mainly capture remotely delivered services and those consumed abroad, though remote services only accounted for 30% of estimated global trade in services as of 2014.
Value creation and delivery has further evolved with platform businesses that connect users, providers, and advertisers across borders. Many services are offered free of charge to users and monetized indirectly through the use of data to improve services, target advertising, or train AI models. Data usage rights is a commodity with cloud computing and cross-border data flows are used to generate value.
Platforms exhibit strong network effects mean they become more valuable as more users join, often leading to winner-takes-most dynamics. A handful of firms dominate global digital markets, controlling vast amounts of user data and revenue. Services and information products have become more tradable as algorithms are used to scale businesses rapidly and to operate seamlessly across multiple countries.
Such services subtly but powerfully integrate economies. A social media trend can shape discourse across borders, a search engine’s algorithm may be used globally, and technical standards set by a few firms can influence entire industries. These are not exports in the traditional sense, but they carry real economic weight. Comparative advantage is increasingly rooted in innovation ecosystems and data capabilities, as companies that harness data effectively can shape global markets.
Yet, the frameworks we use to measure trade still treat goods and services as distinct. This undercounts the influence of the digital economy, where services often improve consumer welfare without equivalent spending. International institutions are working to better measure digital trade, including e-commerce and data flows. The challenge is not just statistical as it reflects a broader transformation in what we trade, how we trade it, and who benefits.
Principaux enseignements
- Methodological innovations are needed to better capture the value generated through cross-border data flows.
Digital platforms often use data collected in one country to optimize services delivered in another, making user data a central driver of value creation. This raises the question of whether cross-border data flows should be recognized as a distinct category of international trade. - A growing share of value in tangible goods exports now comes from embedded services.
High-value services are increasingly performed in different countries and integrated through global value chains. This dispersion of intermediate inputs blurs the traditional line between goods and services trade. - Trade, taxation, and competition rules must evolve to reflect platform-driven digital markets.
Platforms with strong network effects concentrate control over user data, creating barriers to entry and distorting competition. Ongoing negotiations on digital taxes and monopolistic behaviour must consider differences in digital infrastructure, innovation ecosystems, and data capabilities.
Pour citer :
Warin, T. (2025). Historical and Contemporary Evolution of International Trade: From Mercantilism to the Platform Economy (2025s-12, Working Papers, CIRANO.) https://doi.org/10.54932/IQEN6866