The economic impact of cross-border data flows

Frontier Economics’ report for DIGITALEUROPE estimating the economic impact of cross-border data flows on the EU’s economy, and the potential impact of changes to existing restrictions on these flows, has been published today.

The report was launched at DIGITALEUROPE’s Summer Summit: ‘Data and the Digital Decade.’

Cross-border data flows play a central role in an increasingly digitised economy. They underpin modern international trade and investment, reflecting the wider role data plays in enhancing the operations of firms, and in creating new business models based on the use, processing and storage of data.

Cross-border transfers of data have facilitated the rise of global value chains. During the height of the COVID-19 pandemic, cross border flows of data have also helped to coordinate economic activity internationally, mitigate the adverse effects on trade, and support critical value chains such as medicines.

A moderately restrictive scenario is one in which the EU is unable to rely on GDPR transfer mechanisms, and in which trade partners increase their overall levels of restrictions on cross-border data flows. Our modelling suggests that such a scenario leads to a reduction in EU exports of around 4%, and in 1% of GDP per year. Cumulatively to 2030, losses amount to €1.3 trillion.

Hilary Mine (President) and Cecilia Bonefield-Dahl (Director General) of DIGITALEUROPE said: “This study demonstrates that even in a limited assessment – by looking only at international trade – cross-border data transfers can have a huge positive impact on the economy by 2030 if we make the right decisions now.”

Our report for DIGITALEUROPE provides new, robust estimates of the economic cost to the EU of additional restrictions, and the potential economic gain that could result from liberalisation.

Please click here to view full report and DIGITALEUROPE’s summary.