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29 September 2021   Economic Development

The world needs a new approach to allow as many people as possible to access digital data across borders, the UN Conference on Trade and Development (UNCTAD) said on Wednesday. 

This should help maximize development gains and ensure that they are equitably distributed, said the agency, launching its Digital Economy Report 2021. 

A new approach should also enable worldwide data sharing, increase the development of global digital “public goods”, increase trust and reduce uncertainty in the digital economy, UNCTAD added. 

The report stressed that the new global system must 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,” UN Secretary-General António Guterres said in his preface to the report. 

“The current fragmented data landscape... may create more space for substantial harms related to privacy breaches, cyberattacks and other risks” he added.   

New governance 

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

For example, sharing health data globally is of “critical importance” as it can help countries fight disease outbreaks, and for research purposes, in the development of effective vaccines: “The issue of digital governance can no longer be postponed,” UNCTAD Secretary-General Rebeca Grynspan said.  

“The global data economy calls for moving away from the silo approach towards a more holistic, coordinated global approach,” UNCTAD Deputy Secretary-General Isabelle Durant added.  

New data body  

UNCTAD is proposing the formation of a new United Nations coordinating body, focused on assessing and developing global digital and data governance. 

The body should seek to remedy the underrepresentation of developing countries and provide sufficient policy space to ensure countries with different levels of digital readiness and capacities, can truly benefit. 

Differing approaches 

The report notes that now, there are widely diverging approaches to data governance, with three leading players – the United States, China and the European Union (EU). 

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

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

The new approach would allow countries to better harness data for public benefit, agree on rights and principles, develop standards and increase international cooperation. 

The report also highlighted that 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, it said pointing out that the current regional and international regulatory frameworks tend to be either too narrow in scope or too limited geographically.  

Data divide 

The report warned that a data-related divide is emerging, 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. 

Only 20 per cent of people in the least developed countries (LDCs) use the internet, and when they do, it’s typically at relatively low download speeds and with a relatively high price tag attached, the report said. 

It also noted that the average mobile broadband speed, is about three times higher in developed countries than in LDCs. And while up to eight out of 10 internet users shop online in several developed countries, only less than one out of 10 do so in many LDCs, it added. 

US, China dominate 

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

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

Corporate growth 

The report warns that it has become increasingly difficult to consider regulations of cross-border data flows without also considering the governance of the digital corporations. 

These platforms continue to expand their own data ecosystems and increasingly control all stages of the global data value chain. 

The largest digital platforms, Apple, Microsoft, Amazon, Alphabet (Google), Facebook, Tencent and Alibaba, are increasingly investing in all parts of the global data value chain, the report said. 

Amazon for example, has invested some $10 billion in satellite broadband, while Amazon, Apple, Facebook, Google and Microsoft, were the top acquirers of AI startups between 2016 and 2020. 

Four major platforms (Alibaba, Amazon, Google and Microsoft) accounted for 67 per cent of global cloud infrastructure services revenues in the last quarter of 2020.  

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