Cross Border Data Flows: The impact of data localisation on IoT

CROSS-BORDER DATA FLOWS: THE IMPACT OF DATA LOCALISATION ON IOT
Scenario 1: IoT generates new gains compared to today.
<strong>The</strong>re are two types <strong>of</strong> efficiency gains from IoT
deployment in our model: the productivity gains within
the economy; and the trade-enhancing effects when
the economy trades with other economies.
In the first instance, we shock the model by using the
productivity gains from GSMA Intelligence (2019)
to Brazil, Indonesia, South Africa and the rest <strong>of</strong> the
world that agglomerates all other economies in the
model. <strong>The</strong> productivity shocks are introduced as TFP
increases that apply to the domestic economy.
In other words, we assume that the global economy
deploys IoT applications according to the GSMA
Intelligence (2019) calculations for the year 2025.
Obviously, this baseline assumes ceteris paribus for
all other technologies, policy measures or economic
developments aside from the extrapolation described
in the previous chapter. <strong>The</strong> TFP shocks from the GSMA
Intelligence study are:
Table 1
Domestic productivity increase due to IoT.
Percentage change in the respective country/region from IoT technology.
Total Factor Productivity (TFP) change (%)
Brazil 0.27
Indonesia 0.24
South Africa 0.17
Rest <strong>of</strong> the world 0.34
In addition to the domestic shocks, we also introduce
a productivity effect ‘at the border’ for imports <strong>of</strong>
trade and services from overseas. This trade efficiency
<strong>impact</strong> <strong>of</strong> IoT applies concurrently with the domestic
productivity increase identified by GSMA Intelligence
(2019).
<strong>The</strong> trade efficiency-enhancing effect from IoT is
based on the <strong>impact</strong> <strong>of</strong> connectivity on trade which
was identified in the WTO study cited above. How IoT
reduces the import prices <strong>of</strong> goods and services and
increase product variety is estimated for a similar point
in time, i.e. after approximately seven years .25
Table 2
Import efficiency due to IoT.
Percentage change in the respective country/region from IoT technology.
Trade cost change: AMS (%)
Brazil -0.68
Indonesia -1.88
South Africa -4.82
Rest <strong>of</strong> the world -0.62
25. This trade efficiency shock is denoted Aggregate Measurement <strong>of</strong> Support (AMS) shock in the GTAP model
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