Cross-Border Data Transfers & Economic Development

Cross-border data transfers and digital connectivity are critical to sustainable economic development, helping to ensure access to global markets, innovation, finance, food, and healthcare, as summarized below.
  • Data Transfers & MSME Access to Global Markets. The ability of micro-, small-, and medium-sized enterprises (MSMEs) from developing countries to access global markets where they can offer and sell their services and products depends on cross-border access to information and cloud-enabled technologies. Cross-border access to marketplaces, purchasers, suppliers, and other commercial partners allows local MSMEs to engage in international transactions and create jobs at home. As USAID has explained, “[d]igital ecosystems have the potential to equip informal merchants, women entrepreneurs, smallholder farmers, and MSMEs engaged in cross-border trade with access to markets, information, and finance. These diverse users require trustworthy services that reflect their needs….[D]igital trade that spans borders depends on free data flows, digitized customs, and innovations in trade finance made possible by new approaches to lending.”
  • Data Transfers & Access to Finance in Developing Countries. Advances in financial inclusiveness, financial transparency, and financial security across developing countries also depend on cross-border access to data and cloud-enabled technologies. There remain more than 2.5 billion unbanked people worldwide, many living on remote and isolated locations lacking in banks or other on-the-ground financial service providers. Technologies that leverage data transfers can increase access to financial services—particularly as 95 percent of the world’s population is already covered by mobile broadband networks. For example, through microlending, microfinance institutions use technologies based on data transfers to provide better loans, achieve greater repayment rates, and lower interest rates for applicants. Similarly, remittances promote access to finance in developing countries. According to the World Bank, remittances to low- and middle-income countries reached a record high of $529 billion in 2018. Financial institutions have reported savings between 40 and 70 percent in foreign exchange costs, and payment times averaging just a few seconds.
  • Data Transfers & Agriculture in Developing Countries. The World Bank estimates that agriculture accounts for up to 25 percent of gross domestic product (GDP) and 65 percent of the lower income population in some developing countries, and that growth in the agriculture sector is two to four times more effective in raising incomes among those populations. Cross-border data transfers can also help farmers reduce transaction costs and arbitrage by middlemen, given that up to 70 percent of smallholder production value is captured by different intermediaries.
  • Data Transfers & Access to Healthcare in Developing Countries. Remote health services for medically underserved populations and the search for tomorrow’s medical treatments also depend on cross-border access to data and cloud-enabled technologies. These technologies can improve health outcomes through (1) the online healthcare education efforts of international health and development agencies; (2) cross-border access to clinical testing and other R&D data to aid in the treatment of diseases, including tropical, rare, and neglected diseases; and (3) cross-border digital humanitarian assistance, as described by the World Health Organization.