Bilateral Trade in Services: Insights from A New Database

This paper introduces the Bilateral Trade in Services (BiTS) database. It draws on a range of sources to provide the broadest-possible, consistent coverage of bilateral services trade for the period 1985-2023. The database covers bilateral trade across 12 major services categories, 9 of which are further disaggregated into 26 distinct subcategories, all harmonized under a consistent BPM6 classification standard. While historical data is only available for some advanced economies and emerging markets, the bilateral flows contained in BiTS capture most of global services trade from 2000 onwards. We illustrate the uses of this data through two research applications. The first shows that "gravity forces" have become less powerful in explaining services trade patterns over time, due to a shift in the composition of trade towards less distance-sensitive services. The second documents that overall services trade remains resilient to growing geopolitical fissures, but that modern services appear more sensitive to geopolitical alignment than traditional services.