Data localization measures threaten to undermine many of the efficiencies and economic opportunities of the digital economy. These requirements — for data to be stored, processed, or duplicated within national border — impose costs and inefficiencies broadly across the economy. They are also a barrier to financial service efficiency, fraud prevention, and innovation. This IIF staff paper outlines the issues, as we seek empirical economic costs to localization, while suggesting better approaches in the pursuit of trusted, permissioned, and private flow of data across industries and national borders.
We expect that 2021 will see global leaders focusing on new frameworks for the digital economy to address data flows and the drivers behind data localization.