How Barriers to Cross-Border Data Flows Are Spreading Globally, What They Cost, and How to Address Them

July 19, 2021
  • The number of data-localization measures in force around the world has more than doubled in four years. In 2017, 35 countries had implemented 67 such barriers. Now, 62 countries have imposed 144 restrictions—and dozens more are under consideration.
  • Restricting data flows has a statistically significant impact on a nation’s economy—sharply reducing its total volume of trade, lowering its productivity, and increasing prices for downstream industries that increasingly rely on data.
  • Using a scale based on OECD market-regulation data, ITIF finds that a 1‑point increase in a nation’s data restrictiveness cuts its gross trade output 7 percent, slows its productivity 2.9 percent, and hikes downstream prices 1.5 percent over five years.
  • China is the most data-restrictive country in the world, followed by Indonesia, Russia, and South Africa. Their economies will all suffer for it.
  • Policymakers should update laws to address legitimate data-related concerns, but they should ensure people, firms, and governments can maximize the enormous societal and economic benefits of data and digital technologies.
  • To build an open, rules-based, and innovative digital economy, countries like Australia, Canada, Chile, Japan, Singapore, New Zealand, the United States, and the United Kingdom must collaborate on constructive alternatives to data localization.

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