Data Is Power

Washington Needs to Craft New Rules for the Digital Age

Data is now at the center of global trade. For decades, international trade in goods and services set the pace of globalization. After the global financial crisis, however, growth in trade plateaued, and in its place came an explosion of cross-border data flows. Measured by bandwidth, cross-border data flows grew roughly 112 times over from 2008 to 2020.

The global economy has become a perpetual motion machine of data: it consumes it, processes it, and produces ever more quantities of it. Digital technologies trafficking in data now enable, and in some cases have replaced, traditional trade in goods and services. Movies, once sold primarily as DVDs, now stream on digital platforms, and news, books, and research papers are consumed online. Even physical goods come laden with digital components. Cars are no longer merely chassis built around internal combustion engines; they also house complex electronics and software capturing massive amounts of data. Trade in physical goods also comes with digital enablers, such as devices and programs that track shipping containers, and these likewise generate data and improve efficiency. And now, COVID-19 has sped up the digital transformation of businesses, pushing even more commerce into the cloud.

Digital trade and the cross-border flow of data show no signs of slowing. In 2018, 330 million people made online purchases from other countries, each involving the cross-border transmission of data, helping e-commerce hit $25.6 trillion in sales, even though only about 60 percent of the world is online. Imagine how much data will grow as broadband access spreads to the developing world’s rapidly expanding populations, 5G wireless technology allows even more extraordinary amounts of data to transfer at lightning speed, and the so-called Internet of Things dramatically increases machine-to-machine communication.

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