The world needs a new global governance approach to enable digital data to flow across borders as freely as necessary and possible, says UNCTAD’s Digital Economy Report 2021 released on 29 September.

The UN trade and development body says the new approach should help maximize development gains, ensure those gains are equitably distributed and minimize risks and harms.

It should also enable worldwide data sharing, develop global digital public goods, increase trust and reduce uncertainty in the digital economy.

The report says the new global system should also help avoid further fragmentation of the internet, address policy challenges emerging from the dominant positions of digital platforms and narrow existing inequalities.

“It is more important than ever to embark on a new path for digital and data governance,” says UN Secretary-General António Guterres in his preface to the report.

“The current fragmented data landscape risks us failing to capture value that could accrue from digital technologies and it may create more space for substantial harms related to privacy breaches, cyberattacks and other risks.”

UNCTAD Secretary-General Rebeca Grynspan said: “We urgently need a renewed focus on achieving global digital and data governance, developing global digital public goods, increasing trust and reducing uncertainty in the digital economy. The pandemic has shown the critical importance of sharing health data globally – the issue of digital governance can no longer be postponed.”

Pandemic underscores need for new governance

Digital data play an increasingly important role as an economic and strategic resource, a trend reinforced by the COVID-19 pandemic.

The pandemic has shown the importance of sharing health data globally to help countries cope with its consequences, and for research purposes in finding vaccines.

“The increased interconnection and interdependence challenges in the global data economy call for moving away from the silo approach towards a more holistic, coordinated global approach,” UNCTAD Deputy Secretary-General Isabelle Durant said.

“Moreover, new and innovative ways of global governance are urgently needed, as the old ways may not be well suited to respond to the new context,” she added.

 New UN data-related body proposed

UNCTAD proposes the formation of a new United Nations coordinating body, with a focus on, and with the skills for, assessing and developing comprehensive global digital and data governance. Its work should be multilateral, multi-stakeholder and multidisciplinary.

It should also seek to remedy the current underrepresentation of developing countries in global and regional data governance initiatives.

The body should also function as a complement to and in coherence with national policies and provide sufficient policy space to ensure countries with different levels of digital readiness and capacities can benefit from the data-driven digital economy.

Time to tackle divergence in data governance

The report says the current global context is characterized by diverging approaches to data governance, notably by the three leading players – the United States, China and the European Union (EU).

The US approach focuses on control of data by the private sector, the Chinese model emphasizes control of data by the government, while the EU favours control of data by individuals, based on fundamental rights and values.

UNCTAD’s director of technology and logistics, Shamika N. Sirimanne, said the absence of a global data governance framework hampers countries’ ability to reap benefits from the digital economy.

It also hinders their ability to protect the privacy of people from both private sector and government use of data, and to address concerns related to law enforcement and national security.

“We need a new regulatory framework that factors in both economic and non-economic dimensions, and that can work for countries at different levels of digital readiness,” Ms. Sirimanne said.

She noted that the new approach would allow countries to better harness data as a global public good, agree on rights and principles, develop standards and increase international cooperation.

And while more attention is given to data at the international level, the international debate on the governance of cross-border data flows is at an impasse due to diverging views and positions on their regulation. The proposed new global data governance approach could contribute towards developing a middle-ground solution.

The report says current regional and international regulatory frameworks tend to be either too narrow in scope or too limited geographically. These fail to enable cross-border data flows with an equitable sharing of economic development gains while properly addressing risks.

Data divide leaves developing countries behind

The report warns that a data-related divide is emerging as the data-driven digital economy evolves, resulting in many developing countries becoming mere providers of raw data to global digital platforms, while having to pay for the digital intelligence generated from their data.

The US and China are the frontrunners in harnessing data, according to the report. They account for 50% of the world’s hyperscale data centres, the world’s highest rates of 5G adoption, 70% of the world’s top artificial intelligence (AI) researchers and 94% of all funding for AI startups.

The two countries also make up about 90% of the market capitalization of the world’s largest digital platforms, and during the pandemic their profits and market capitalization values have surged tremendously.

For the world’s top seven digital platforms, between October 2019 and January 2021, stock prices rose by between 55% (Facebook) and 144% (Apple).

Global platforms growing bigger

As the race for leadership in technological developments to gain economic and strategic advantages rages, global digital platforms continue to expand their own data ecosystems and increasingly control all stages of the global data value chain.

Hence, the report says, it becomes increasingly difficult to consider regulations of cross-border data flows without also considering the governance of the digital corporations.

The report’s findings will feed into discussions during UNCTAD’s 15th quadrennial conference to be held online from 3 to 7 October.