Last year, DOC economist Jessica Nicholson and I wrote "Digital Economy and Cross-Border Trade: The Value of Digitally-Deliverable Services." In that report, we estimated the total value of U.S. trade in digitally-deliverable services—i.e., services that may be, but are not necessarily, delivered digitally. Since the publication of our report, we have received many requests to provide updated data on this valuable sector of our economy. This blog is written in response to those requests; we find that in 2014, continued growth in both exports and imports resulted in a digitally-deliverable trade surplus of $158.9 billion.
Since the original publication of our report in January 2014, the Bureau of Economic Analysis (BEA) has conducted a comprehensive restructuring of its international economic accounts. Because of this restructuring, the categories we originally used to estimate the value of digital services trade are no longer the most up-to-date ones available. The category we previously called "royalties and license fees" is now called "charges for the use of intellectual property," while "business, professional, and technical services" has been split into two categories – "maintenance and repair services" and "other business services." As services in the former category are unlikely to be provided digitally, we have chosen to exclude them from this update.
Excluding maintenance repair services would lead us to expect a smaller overall value for digitally-deliverable services. However, BEA also revised previously-collected data and this slightly increased the total value of services trade; even when subtracting maintenance and repair services, the value of digitally-deliverable exports is slightly higher than we found in our earlier report. For example, our original report estimated exports of these services at $357.4 billion in 2011, compared to our updated estimate of $358.5 billion for that year.
Our updated analysis reveals that in 2014:
- The United States exported $399.7 billion in digitally-deliverable services, an increase of 12 percent since 2011. This represented 56 percent of U.S. services exports and about 17 percent of total U.S. goods and services exports.
- The United States imported $240.8 billion in digitally-deliverable services, an increase of 7 percent since 2011. This represented 50 percent of U.S. services imports and about 8 percent of total U.S. goods and services imports.
- The United States had a digitally-deliverable services trade surplus of $158.9 billion. Because exports have increased at a faster rate than imports, the surplus has expanded by 19 percent since 2011.
In 2014, charges for the use of intellectual property (formerly royalties and license fees) accounted for the largest share of digitally-deliverable services exports (33 percent), followed by other business services (32 percent), finance (22 percent), telecommunications (8 percent), and insurance (4 percent). Other business services accounted for 40 percent of digitally-deliverable services imports in 2014, followed by insurance (20 percent), charges for the use of intellectual property (17 percent), telecommunications (14 percent), and finance (8 percent).
Overall, as in 2011, the only category that registered a trade deficit was insurance services, in which imports exceeded exports by $32.6 billion. The largest trade surplus was in charges for the use of intellectual property, which saw a surplus of $90.7 billion and accounted for more than half of the overall digitally-deliverable trade surplus.
Digitally-deliverable services continue to be an important contributor to U.S. trade, accounting for more than half of all services trade and more than one-sixth of overall trade in goods and services. Furthermore, while the United States registered a trade deficit of more than $500 billion in 2014, these services contributed a surplus of more than $150 billion to the economy—a surplus that is continuing to grow. This data highlights both the important contribution of this sector to our economy, as well as the need to adapt Federal statistics to measure our dynamic economy.