Services account for a growing share of economic activity and trade globally, although their contribution to countries’ GDP varies widely. In developed economies, services account for about 70% of GDP and a similar share of total employment, says UN Trade and Development (Unctad).

In developing economies, services generate more than half of economic activity with significant variations across country groups, from 66% of GDP in small island developing States to 42% in least developed countries (LDCs).

Services have also gained ground in global trade, with their share of global exports having risen to 27% in 2025 from 23% in 2015, despite a temporary decline in 2020 to 2021 during the Covid-19 pandemic.

Services are traded indirectly as inputs embodied in exported goods. This content is substantial, but uneven, with services representing 33% of intermediate inputs in industrial goods exports in developed economies, 27% in developing ones and 13% in the LDCs.

Services should be viewed not only as a sector, but also as critical inputs into the production and export of goods. The quality, cost and availability of services directly affect competitiveness and participation in global value chains across all sectors, Unctad says in its September 2026 'Global Trade Update’.

What matters for development is not only the size of the services sector, but also its composition and linkages with the broader economy.

“Productive, tradable and knowledge-intensive services can act as catalysts for economic diversification by raising productivity, supporting innovation, creating higher-value jobs and strengthening the competitiveness of firms across all sectors.”

As services become increasingly embedded in manufacturing, agriculture and other economic activities, their role extends beyond a standalone sector to a key enabler of structural transformation, resilience and sustainable development, Unctad says.

Better measurement of services trade, including services embedded in goods exports, is essential to understand their contribution to competitiveness, diversification and development.

Strengthening data collection and measurement is critical for informed trade policymaking and economic transformation, it adds.

Further, services are becoming more central to production and trade, as shown by two trends, namely servicification and servitisation.

Servicification is the growing use of services as inputs across all sectors, from agriculture to manufacturing. Logistics, finance, design and data management are increasingly embedded in what firms produce and export, even when the final product is a physical good.

It has emerged as a key driver of economic diversification, structural transformation and participation in global value chains, Unctad says.

Meanwhile, servitisation is a shift in business models, where firms that previously sold goods now bundle services with their products or sell the services that products provide, such as maintenance contracts or performance guarantees, rather than the products themselves.

Over the past decade, world services exports expanded by about 6.7% a year, outpacing growth in goods exports, and grew by 8.3% in 2025. Digitally deliverable services grew even faster, at an average of 7.1% a year, and now make up 56% of global services exports.

The expansion of digitally deliverable services has been an important driver of this growth, enabled by the spread of digital platforms, cloud computing and improved connectivity in some regions.

LDCs have benefited far less from this growth. Their services exports grew by only 3% a year over the same period, while their share of global services exports, already below 1% in 2010, declined further to just 0.6% in 2025.

Although digitally deliverable services exports have outpaced both goods and total services exports across all country groups since 2014, digitally deliverable services represent just 16% of LDC services exports, compared with 61% in developed economies, and growth in LDCs has been the weakest, Unctad says in the report.

A combination of structural constraints, including limited digital infrastructure, inadequate connectivity, weak regulatory frameworks and insufficient skills continue to hinder LDC participation in the fastest-growing segments of global services trade.

Further, while digitally deliverable services exports from LDCs have grown in absolute terms, their share of total services exports has decreased over time.

This gap reflects differences in digital infrastructure and connectivity and also points to diverging export structures, namely that LDCs remain heavily reliant on traditional services, such as transport and travel, while developed economies and an increasing number of developing economies have moved into higher value-added knowledge-intensive and digitally deliverable services.

As a result, LDCs are capturing only a small share of the fastest-growing segment of global trade.

Many developing countries, particularly LDCs, remain only marginally integrated into rapidly growing services trade, especially in digitally deliverable services, Unctad says.

The report identifies three priorities to address this, namely improving services trade data, strengthening digital infrastructure and skills and ensuring more meaningful participation by developing countries in international rule-making.

These measures can help countries translate services growth into higher productivity, competitiveness and economic diversification.

Inadequate connectivity, costly international payments and skills shortages constrain participation in digital services trade. Affordability and connectivity gaps remain significant between developed and developing economies.

AI could also intensify existing inequalities because computing capacity, data, finance and expertise remain concentrated in a small number of economies and firms. Less than one-third of developing countries have adopted national AI strategies.

Countries need stronger digital infrastructure and skills, better payment systems and greater AI readiness, backed by international cooperation, the UN agency states.

Meanwhile, multilateral services trade rules were largely designed before the digital era. Digital trade provisions have expanded rapidly through regional and bilateral agreements, which has created a more fragmented regulatory landscape with uneven participation.

Of the preferential trade agreements signed between 2000 and 2025, 55% include e-commerce or digital trade provisions. Since 2020, 90% of developed countries, 62% of developing countries and 66% of LDCs have participated in agreements containing such provisions.

Greater transparency, regulatory cooperation and negotiating capacity can help developing countries participate meaningfully in emerging rule-making, so that new rules reflect different levels of development and national priorities, Unctad recommends in the report.