The Global Office: How Globalisation’s Frontier is Shifting from Factories to Offices -- by Richard Baldwin
This paper argues that globalisation’s frontier has shifted from manufacturing GVCs to services GVCs: from the Global Factory to the Global Office. While the Factory remains larger in gross trade, the Office is growing much faster. A heatmap of trade in intermediates shows that the Factory is bloc-shaped and dominated by China, whereas the Office is star-shaped and dominated by America. Gravity estimates show that distance matters less for Office exports, but time zones matter more: each hour of
7 November 2026 · Source: NBER new working papers
This paper argues that globalisation’s frontier has shifted from manufacturing GVCs to services GVCs: from the Global Factory to the Global Office. While the Factory remains larger in gross trade, the Office is growing much faster. A heatmap of trade in intermediates shows that the Factory is bloc-shaped and dominated by China, whereas the Office is star-shaped and dominated by America. Gravity estimates show that distance matters less for Office exports, but time zones matter more: each hour of time-zone separation reduces Office exports by roughly 4%, while having no effect on Factory exports. Importantly, all of the world’s export-linked net job creation between 2008 and 2022 occurred in digitally delivered services rather than manufacturing, and trade-linked service jobs command higher average pay globally. The Factory-to-Office shift is also reshaping development. Most emerging economies have seen export-led growth tilt towards services, but their service exports are not yet large enough to drive overall GDP growth the way manufacturing did historically. The big picture is that globalisation’s second unbundling is running out of steam even as its third unbundling is powering ahead. The paper, which raises more questions than it answers, closes with the conjecture that the future of trade is services. Acknowledgements and Disclosures I owe a particular debt of gratitude to Andrew Bernard, Daria Taglioni, Gene Grossman, Martin Roy and Sébastien Miroudot for their exceptionally thoughtful, detailed and constructive comments on earlier drafts. Their insights, criticisms and suggestions have substantially improved the paper, often prompting me to rethink important aspects of the analysis and its interpretation. I am especially grateful to Gene Grossman for engaging so generously with the ‘vibe model’ of service global value chains, and to Sébastien Miroudot for his extraordinary generosity with data, calculations and technical expertise, which greatly strengthened the empirical analysis. I am also very grateful to Ann Harrison, Bernard Hoekman, Michele Ruta and Christine Wan for their careful reading, valuable insights and constructive suggestions. Collectively, these comments prompted a major revision of the paper between the August 2026 draft, which was not publicly circulated, and the October 2026 version. The paper is considerably better thanks to all of them. The remaining shortcomings and errors are, of course, entirely my own. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. I owe a particular debt of gratitude to Andrew Bernard, Daria Taglioni, Gene Grossman, Martin Roy and Sébastien Miroudot for their exceptionally thoughtful, detailed and constructive comments on earlier drafts. Their insights, criticisms and suggestions have substantially improved the paper, often prompting me to rethink important aspects of the analysis and its interpretation. I am especially grateful to Gene Grossman for engaging so generously with the ‘vibe model’ of service global value chains, and to Sébastien Miroudot for his extraordinary generosity with data, calculations and technical expertise, which greatly strengthened the empirical analysis. I am also very grateful to Ann Harrison, Bernard Hoekman, Michele Ruta and Christine Wan for their careful reading, valuable insights and constructive suggestions. Collectively, these comments prompted a major revision of the paper between the August 2026 draft, which was not publicly circulated, and the October 2026 version. The paper is considerably better thanks to all of them. The remaining shortcomings and errors are, of course, entirely my own. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. Citation and Citation Data Copy Citation Richard Baldwin, "The Global Office: How Globalisation’s Frontier is Shifting from Factories to Offices," NBER Working Paper 35975 (2026), https://doi.org/10.3386/w35975. Copy to Clipboard Download Citation MARC RIS BibTeΧ Download Citation Data In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals—the NBER Reporter, the NBER Digest, the Bulletin on Health, the Bulletin on the Economics of Alzheimer's, and the Bulletin on Entrepreneurship—as well as research spotlights, lectures, and panel videos. Presenters: Melissa Dell & Ashesh Rambachan Presenter: Paul Goldsmith-Pinkham