June 15, 2021

How can the “data revolution” work for developing economies?

New World Bank report shows how data could make an impact, and offers pathways to do so

The creation, use, misuse and control of data is the subject of intense debate today, as it should be. Individuals still ponder how best to manage and protect their personal data, and governments, private businesses and international bodies may have informed data management policies, or none at all.

But decisions need to be made in this complicated landscape. And this is especially true for developing countries, which are largely left out of global data discussions but where the right data policies could bring a lot of benefits.

A new World Bank analysis, the World Development Report 2021: Data for Better Lives (WDR 2021), foregrounds lower-income countries and the ways they could gain, or lose, with data governance and management decisions. These are places, which include the least developed countries (LDCs), that may struggle with a host of issues from internet connectivity to conflict and instability that affect their capacity to collect, manage, store and govern their own data.

Information is flowing and growing at massive rates. In 2020, global internet traffic was estimated to be more than three zettabytes, or 3,000,000,000,000 gigabytes (GB). Picture this as two piles of books sitting on the Earth’s surface transmitted to the International Space Station every second.

And the speed of growth – including in data centers, in the services trade and in broadband – means that countries without the infrastructure, the plans and the policies can very quickly be left behind. Below is a snapshot of the report’s findings, with a focus on LDCs, trade and what could happen next.

Nations need data

Data can be a force to obtain development benefits, the World Bank report states, helping to drive economies, empower citizens and improve public services. For example, various countries marshalled cellular data to track the spread of COVID-19, including The Gambia, where the government used call detail records to help determine whether lockdowns were effective in reducing people’s movements.

The report notes that the creative use of data, of sharing and using and using again and combining different types, is a way to deliver more progress beyond the original intent of the data collection. Seeing data in this way, as having multiple purposes, can help to develop more insights that can lead to better impacts. Safely reusing and combining data from public and private sources while also applying modern analytical techniques allows data sets to be more precise and more time-sensitive.

Information about households can be used in a host of positive ways, including to identify community needs and to direct services accordingly. For example, Tanzania was able to create a more detailed map of its impoverished regions using household data combined with satellite imagery (see Figure 1).

Figure 1

 

Source: World Development Report 2021, Data for Better Lives. Tanzania, Mainland Poverty Assessment 2019: Executive Summary.” World Bank, Washington,

DC. https://www.worldbank.org/en/country/tanzania/publication/tanzanias-path-to-poverty-reduction-and-pro-poor-growth. Data at https://datacatalog.worldbank.org/dataset/world-development-report-2021-map-o3

But countries, and especially LDCs like The Gambia and Tanzania, face challenges with data collection, sharing and reuse, from having the human resources to weak regulatory environments and policies to awareness, incentives and funding. Because of this, governments may not have census figures, do surveys, digitize administrative records or support the development of other data sources.

“No low-income country has a fully funded national statistical plan, and that signals the chronic underinvestment in public intent data systems. This leads to data gaps that continue to exist for the most pressing development challenges,” said Malarvizhi Veerappan, Manager of the WDR 2021 and Senior Data Scientist at the World Bank Group. Of high-income countries, 93% have a fully funded national statistical plan.

She said, “For example, a tool being released with this report to help countries monitor the performance of their data systems, the Statistical Performance Indicators, reveals that half of low-income countries have not undertaken a population census in the last 10 years and 18% have not done so in the last 20 years.”

Quarterly or monthly industrial production indexes, which inform policy makers of current economic activity, are available in only 9% of low-income countries, compared with 64% of high-income countries, according to the tool.

These disparities highlight the need for action at many levels so gaps like these don’t continue to widen. The report notes that one way to solve this is by increasing financing for data, which requires, obviously, money, as well as understanding of the value of collecting, sharing and improving data flows. Financing for data can be an investment as well, the report notes.

New social contract for data

The report states, “data themselves won’t help lift people out of poverty. It’s the people using them that generate insights that can turn into action to improve development outcomes.”

A “social contract for data” is proposed, so data are better wielded to fight poverty across the world, supporting development in such ways as identifying civic needs, monitoring the impact of government policies and analyzing crop yields.

The report’s proposed social contract is formed around value, equity and trust. With value, safe collaborations between data creators and data users could form so that data can be shared, reused and combined for more insights and ideas. The equity element ensures that impoverished people and lower income countries are fully included and that they have access to the value that is and can be derived from data.

Trust that one’s data won’t be misused, hacked or employed to discriminate is paramount.

Having data governance environments helps to create that value, equity and trust, the report states. This includes four layers: 1) infrastructure like full broadband coverage, 2) laws and regulations like safeguards against misuse and standards for interoperability, 3) economic policies like trade in data-enabled services and taxation of businesses, and 4) institutions that regulate, oversee and work to secure data.

For countries to realize the full potential of data and facilitate greater reuse and repurposing of data requires better data systems supported by effective data governance environments. The report lays out an aspirational vision of an integrated national data system (INDS) to deliver on the promise of producing high-quality data that can be safely shared across governments, civil society, academics, individuals and the private sector.

Estonia is the closest to having an INDS, with strong central leadership and its X-Road system that allows public and private databases to automatically exchange information, ensuring confidentiality, integrity and interoperability among parties.

But, comprehensive data governance and well-functioning data systems are not the norm worldwide. There is no singular blueprint and every country will chart its own path. For example, Mexico’s National Institute of Statistics and Geography offers researchers data access through its Microdata Laboratory, which is located in secure enclaves on its premises, provided they undergo an application and training process. Nepal has made it a priority to teach people how to work with data with its Nepal Data Literacy Program, a course designed to support technical skills and enhance a culture of data use.

While most countries are still far away from achieving these goals, the journey is particularly difficult for LDCs, as well as low- and middle-income countries.

Digital trade

When it comes to trade, both trade in goods and trade in services would be improved with enhancements to data governance. Good data could help LDCs better understand their trade flows in order to improve them. Cross-border trade could be enhanced by transitioning to digitized procedures with customs and border management.

Trade in services is increasingly rapidly, but the data on it is not keeping up. The report notes that since 1990, the global trade in data-driven services has grown exponentially and now constitutes half of all trade in services (see Figure 2).

Figure 2

 

Source: WDR 2021 team calculations, based on World Bank, WITS (World Integrated Trade Solution) database, http://wits.worldbank.org/WITS/. Data at

http://bit.do/WDR2021-Fig-O_5. Note: IP = Internet Protocol; PB = petabytes.

 

“One aspect that we highlight in the report is the irony that as trade in digital services expands around the world, our understanding of and our data on digital services is reduced because we don't understand exactly the specific services sectors where the data comes from. And this is of course much more so the case in the developing world and in LDCs,” said Martin Molinuevo, Senior Counsel at the World Bank Group.

A whole of government approach to data, the report suggests, would help to improve the understanding of digital services trade.

Personal data across borders

“We see huge potential for value creation around trade and data-enabled services – it's one of the fastest growing segments of trade. And so there is tremendous economic opportunity there. At the same time, trust in the transfer of personal data across borders is one of the key barriers to more of this type of data-enabled trade in services,” said Vivien Foster, Co-Director of the WDR 2021 and Chief Economist at the World Bank Group.

The report examines the various national policies around cross border personal data flows, categorizing them as open, conditional and limited. These flows are part of digital services trade, so if highly restricted by governments, that will impact the trade itself.

Most developing countries follow the open transfer approach, but this is more by default than an active policy stance, World Bank research found.

The open transfer model, in use by the United States, puts little regulatory burden on providers at both ends of the data transfer, so companies have freedom to share data when doing business. At the same time, there are few safeguards. The limited transfer model, in use by Russia and Nigeria, addresses security concerns, putting certain restrictions on data transfers, including requirements for local storage of data. The conditional model, in use by the European Union, falls somewhere in between, requiring government to certify the adequacy of the personal data  protection regime in the destination country (See Figure 3).

The cross-border rules of these models are associated with varying levels of digital services trade. The report finds that “open transfers” rules are associated with greater digital services trade, while the “limited transfers” approach has a negative correlation with digital services flows. The “conditional transfers” approach appears to offer mixed results in the empirical analysis.

Figure 3

Uptake of regulatory models to cross-border data flows

 

 

Source: WDR 2021 team, based on World Bank, Global Data Regulation Survey, https://microdata.worldbank.org/index.php/catalog/3866. Data at http://bit.do /WDR2021-Map-7_1.

Digital trade can also be boosted by domestic rules on data protection. The report finds that the “open transfers” approach is more strongly correlated to digital services when it is complemented with comprehensive rules on privacy and data protection. So the optimal regulatory approach to digital trade is a combination of flexible cross-border rules, as featured in the United States, with solid protections in the collection and treatment of personal data, as featured in the European Union, according to the report.

International rules and challenges ahead

“I think one of the concerns that low-income countries have about trading their data is whether they're actually going to be able to capture any of the value themselves, or whether that economic benefit will entirely accrue to the foreign company that's adding value to their data,” said Foster.

Global trade rules on data flows remain uncertain, with discussions of digital trade and cross-border data flows at the World Trade Organization (WTO) continuing. The report notes that only one low-income country, Burkina Faso, which is an LDC, has been part of the Joint Statement discussions on digital trade rules at the WTO.

LDCs and other developing countries have a lot to lose without data-focused frameworks in place, as data flows swell and new forms of trade take over. The report ends with a call to action for a global consensus so that data are used for the global public good and that they are wielded for equitable development, with a balance between the use of data for development and protections related to security and privacy concerns. Such a consensus couldn’t come sooner, considering the data we do have and what it says about the future.

Disclaimer

Any views and opinions expressed on Trade for Development News are those of the author(s), and do not necessarily reflect those of EIF.