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Digital trade

Data is disruptive: How data sovereignty is challenging data governance

Published 03 August 2021

The vision of data control, or restricting cross-border data flows, as a means of protecting personal data is disruptive and inaccurate. Whether held by the public or private sector, societies benefit the most when large inventories of data are used, shared, and crossed with other sets of data.

As data has become essential to economic growth, data governance has become critical to modern governance. Yet policymakers are just beginning to learn how to govern various types of data. Under the guise of digital sovereignty, however, some governments are seeking to regulate commercial use of personal data without enacting clear rules governing public sector use of data.

By controlling large volumes of data, officials believe they can gain economic advantage in the digital economy and be better positioned to counter the market power of the giant platforms. But advocates of data sovereignty may be misguided. Researchers cannot yet ascertain if economics of scale and scope in data will yield competitive advantage. However, the hoarding of data by nations or firms may reduce data generativity and the public benefits of data analysis.

In this essay, Professor Susan Ariel Aaronson of George Washington University provides an overview of data governance and trade, and the defensive reactions of governments around the world as data becomes more central in today’s economy – and how trade agreements may facilitate rather than limit restrictions.

This overview is the first in a series of papers that focuses on data governance and trade.

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Susan Ariel Aaronson is a Research Professor and Director of the Digital Trade and Data Governance Hub at George Washington University.

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