Driven by global Internet connectivity, the digital economy relies on the cross-border flow of data. While there is no single definition, the European Commission describes it as “commerce enabled by electronic means – through telecommunications and/or ICT services – covering both goods and services.”
Today, cross-border data flows are essential to global economic and social activity. They underpin international trade operations, logistics, supply chains and digital communication. However, they also pose challenges in privacy, data protection, intellectual property, cybersecurity, national security, regulation and trade, according to the OECD.
In this context, regulatory frameworks play a key role. From WTO multilateral treaties to plurilateral trade agreements and regional regulations, regulations seek to balance the opening of data flows with the protection of information. A recent example is the ASEAN Digital Economy Framework Agreement, launched in September 2023, which aims to strengthen digital cooperation among member countries and contribute up to US$2 trillion to the region’s digital economy by 2030. This agreement sets out key guidelines for digital governance, as highlighted by Ibrahim Kholilul Rohman, Kleovan Nathanael Gunawan and Angelique Johanes in their study “The ASEAN Digital Economy Framework Agreement: Uniting or Dividing?
The impact of digital globalization is evident. An analysis by Jacques Bughin and Susan Lund for the McKinsey Global Institute points out that “global flows of goods, services, finance, people and data have increased global GDP by at least 10% over the past decade.”
As data becomes central to the economy, the design of appropriate regulatory frameworks becomes essential. In this regard, a recent report by the WTO and the OECD, entitled “Economic Implications of Data Regulation: Balancing Openness and Trust"(Economic implications of data regulation: balancing openness and trust), analyses the impact of restrictions on data flows and the growing number of regulations requiring local storage and processing.
The study warns that the economic implications of these regulations are not yet fully understood, especially the challenge of balancing the free flow of data with its adequate protection. Based on the analysis of data flows and business surveys, the organizations' report seeks to guide policymakers on the costs and benefits of their regulatory decisions.
Among its main findings, The report highlights that a global model of open data flows, accompanied by trust safeguards, could generate better economic outcomes for all countries. According to his estimates:
- If all economies adopted open frameworks with safeguards, global exports would increase by 3,6% and global GDP would grow by 1,77%.
- Low- and lower-middle-income economies would benefit the most, with GDP growth exceeding 4%.
- In contrast, a scenario of total fragmentation, in which each country completely restricted data flows, would reduce global GDP by 4,5% and exports in a 8,5%.
The report also warns that a complete lack of regulation is not a viable solution. While it would eliminate trading costs, it would also erode trust in digital transactions.
As for data localization policies – which require data to be stored or processed within a country – their impact varies depending on the measure applied. However, the study notes that removing these restrictions would particularly benefit developing economies.
International organizations therefore maintain that in a world where data is the driving force of digital commerce, the challenge for regulators is to find a balance between promoting economic growth and ensuring security and trust in the digital environment.
Trade policy makers are therefore encouraged to take into account the report's findings. “Economic Implications of Data Regulation: Balancing Openness and Trust”, prepared by OECD and WTO experts, published in early 2025. To access the full document, You can download the PDF here.
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