Authorized Authorized

Percent
Percent
GLOBAL COOPERATION
299
raising standards of living. Barriers to data flows prevent
countries from benefiting fully from the internet,
increasing costs and inefficiencies for firms and
individuals. Firms require free flows of data across
national borders to operate internationally. This is
increasingly important with production being fragmented
into global value chains and the digitization of
goods and services. Firms move data internationally
to control and coordinate their international opera-
tions, maintain an efficient supply chain, and manage
human resources, production, and sales. The data can
range from personal information about employees
and customers to production and technical data. The
emerging use of cloud computing and the “internet
of things” (see spotlight 6, “Six digital technologies to
watch”) will increase the need for freer data flows. In
a survey of U.S. firms in 2012, a large share of firms
felt that data localization requirements and privacy
Figure 6.3 Perception of U.S. firms on barriers to data flows as obstacles
to trade, 2012
percent of firms responding
90
80
70
60
50
a. Requirements to locate data servers in-country
40
30
20
10
0
Large
SME
Large SME Large SME Large SME Large SME Large SME Large SME
Content
Digital
communications
Finance Manufacturing Retail Other services Wholesale
90
b. Barriers to sharing information across borders
80
70
60
50
40
30
20
10
0
Large SME Large SME Large SME Large SME Large SME Large SME Large SME
Content
Digital
communications
Finance Manufacturing Retail Other services Wholesale
Minor obstacle
Substantial obstacle
Source: USITC 2014. Data at http://bit.do/WDR2016-Fig6_3.
Note: Large firms are classified as firms with more than 500 employees. SMEs (small and medium enterprises) are firms with more than 20 employees and less
than 500 employees.