Data-Driven Development

People need to exert greater control over the use of their personal data. Their willingness to share data in return for benefits (real or perceived) and free services, such as virtually unrestricted use of social media platforms, varies by country and by age group (figure ES.4). Consumer research from GfK, a German research institute, shows that willingness to share is highest in China and lowest in Japan. Early internet adopters, who grew up with the internet and are now age 30–40, are the most willing to share. Many countries and regions have taken steps recently to update and reinforce rules on the use of personal data. The European Union's General Data Protection Regulation, which went into effect on May 25, 2018, imposes a long list of requirements for companies processing personal data. Violations will result in fines that could total as much as 4 percent of global annual turnover.

Figure ES.4 Are you willng to share your data?

Other countries have taken steps to restrict the flow of their citizens' data beyond their borders (data localization). In China, where data localization is strongly championed, restrictions on moving data are severe. Long-established controls over technology transfer and state surveillance of the population are predominant, and such measures form part of the country's "Made in China 2025" industrial strategy. The strategy is designed, in part, to make the country a global leader in tech-intensive sectors such as artificial intelligence and robotics. Chinese technology giants, including Baidu, Alibaba, and Tencent, are among the biggest in the world, and the country is establishing strong positions in new sectors like the Internet of Things (appliances, machines, and other items able to connect with the internet and exchange data). Throughout the world, data is regarded as a new asset class vital for industrial competitiveness.

Other emerging markets, such as India, Indonesia, the Russian Federation, and Vietnam, are also seeking data localization. The Russian Federation has blocked LinkedIn from operating in the country after the site refused to transfer data on Russian users to local servers. Divergent rules on the treatment of data impose significant costs on doing business online. Business organizations, including the International Chamber of Commerce, would like to establish rules to restrain what they call "digital protectionism". However, a serious gap exists in global governance with regard to cross-border trade in data, and a coherent approach is prevented by differing philosophies among the main trading blocs.

The ownership and control of data will continue to be a major question for society. Broadly speaking, there are three possible answers to the question "Who controls our data?": firms, governments, or users. No global consensus yet exists on the extent to which private firms that mine data about individuals should be free to use the data for profit and to improve services. Some governments argue that data from a country's citizens belongs to those citizens and should not leave the country without permission. Data dependency leads to new risks of exclusion. The data poor, who leave little or no digital trail because they have limited internet access, are most at risk of exclusion. But, equally, those who live in ways that society deems unconventional may also risk exclusion, for instance, because they lack a digital ID or are considered an insurance risk

This report espouses the view that citizens should control their own data and should be free to choose how to release it and even to commercialize it (figure ES.5), as explored in chapter 4.

Figure ES.5 Toward a new value chain for personal data

The growth of the data economy therefore requires changes in competition policy and the regulation of privacy. In a traditional, or one-sided, market, dominant firms are bad for overall market development. But when it comes to personal data, splitting the market share too many ways may inconvenience users and complicate matters for the individual if the different platforms do not connect, or if they require different passwords. As data becomes more important in shaping markets, it may reinforce tendencies toward monopoly, and thus monopoly profits, unless competition rules are modified to deal with new concepts of dominance. The emergence of multisided platforms, explored in chapter 5, poses new challenges for regulators.

Data and the internet have predominantly been regarded by pioneers and campaigners as a decentralized, self- regulating community. Activists have tended to regard government intervention with suspicion, except for its role in protecting personal data, and many are wary of legislation to enable data flows. But that position is under pressure from the increasing centralization of the internet and a series of revenue data breaches and media exposés of questionable business practices by social media platforms. The use by political parties in Kenya, the United States, and elsewhere of data harvested from social media profiles does not appear to have broken any rules, but it has led politicians on both sides of the Atlantic to take a closer look at social media giants, such as Facebook and Twitter. The proliferation of "fake news" has also spurred calls for action.

Data collected by governments, and thus paid for by taxpayers, arguably belongs to all of us. But there are limits to the openness paradigm. Citizens may not want data about themselves to be exposed without protection. And governments often lack the resources to extract value from their data without private partners. Data-driven development needs greater dialogue between the custodians of a country's data and its users. The key to unleashing the power of datadriven development for developing countries lies in intelligent management, use, and supervision of data.

Chapter 6 reviews data-related policy issues relevant to the digital economy. It considers policies geared toward building consumer trust, policies that facilitate or can affect access to data, and the use of data as infrastructure. The chapter also covers mainstreaming policies, such as those that facilitate the use of data for innovation or those that build digital skills. At least 35 economies are currently drafting data protection laws (map ES.1). In addition, a number of economies are considering reforms to their legal frameworks. One factor driving this consideration is the European Union's adoption of the General Data Protection Regulation. While the regulation introduces, or confirms, many important principles for data protection and privacy, it also extends these principles to firms from other parts of the world that wish to do business in Europe.

Map ES.1 Data protection and privacy legislation worldwide, 2018

Ironically, although data is becoming ever more important, data about data is still hard to find. The Data Notes to this report set out some of the indicators that should exist and present data that do exist on an internationally comparable basis for indicators such as the price and affordability of data transmission and the availability of open government data.

This report aims to stimulate wider debate within the development community on the nature of data for development. It is not the first word on this topic and certainly will not be the last. But it is a topic of growing importance that cannot be ignored.