A recent report by the World Trade Organization (WTO) and the Organisation for Economic Co-operation and Development (OECD) explores the economic implications of data flow regulation. Titled “Economic Implications of Data Regulation: Balancing Openness and Trust,” the report emphasizes the crucial role data flows play in social and economic interactions. It also notes a rise in regulations that condition data flows or require domestic storage or processing.
The report points out that while these regulations aim to balance enabling data flows with safeguarding transferred data, their implications are not fully understood. It draws on information from a business questionnaire and analysis of data flows to aid policymakers in understanding the benefits tied to regulatory choices.
Examining both costs and benefits, the report highlights that global solutions balancing free data flows with trust-building safeguards can yield better economic outcomes across development levels. The adoption of open regimes with safeguards could boost global exports by 3.6% and global GDP by 1.77%. Notably, low and lower-middle-income economies might experience GDP growth exceeding 4%.
Conversely, "full fragmentation," where all economies restrict their data flows entirely, could lead to a 4.5% decline in global GDP and an 8.5% reduction in exports.
The absence of any regulation is linked to negative outcomes as well. While trade costs would decrease without regulations, trust levels would also fall.
Regarding mandates for local storage or processing of data, impacts vary depending on implementation types. The report suggests developing economies stand to gain significantly from eliminating such localisation measures.
The full report is available online for further details.