Volume 52 (2018) / Issue 2
Rising use of digital technologies in the service sector is altering the rules of economic governance and of international trade. Theories of economic development and political economy, such as world-systems theory and Petty’s Law, are being contested by the digital revolution. As technological advances bypass old theory, the service sector is locating globally, with decreasing regard for geography and the assumptions of the old international economic order. This presents new challenges for a legal, commercial and international trade norms and system, which are designed to facilitate tangible cross-border commerce.
Old theories of political economy must be revisited to account for the rise of digitally traded services and some, like Petty’s Law, may not survive emergent conditions. The services trade itself is inadequately considered in official government policy, and by international organizations seeking to promote trade, investment and greater cooperation. This work critically evaluates the policy initiatives of major players in trade in light of these trends in the digital economy. While economic institutions claim to advocate policies that are up to date with the new reality of trade, their approaches are still grounded in the superseded economic theories of the twentieth century.
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