With the digital world becoming increasingly intertwined with our daily lives, from studying and working to shopping, the digital economy has seen significant growth. In the global digital landscape, data often flows across borders for various transactions, meaning that data generated in one country may be stored and processed in another.

This movement of data across international borders isn’t just a technical matter—it’s a major driver of economic development, innovation, international trade, and social progress. However, these cross-border data flows have raised concerns about privacy, security, and data protection. One major worry is data localisation rules, which insist on keeping data within a country’s borders. Different countries may have different approaches to data localisation, depending on factors such as the composition of the country’s economy, type of data and industry.

These restrictions could hinder markets and societies by curtailing the benefits of sharing and reusing data across countries. Therefore, it is crucial to address risks, consider the sensitivity of data, and understand the purpose and context of processing it. How data protection laws and localisation requirements are crafted and enforced can further shape these outcomes.

Recognising this need, LIRNEasia, as part of a network of regional think tanks convened by the World Bank, has launched a study to engage policymakers in the BBINS region (Bangladesh, Bhutan, India, Nepal, Sri Lanka) concerning cross-border data flows. In this initiative, LIRNEasia is joined by partners including ICRIER (India), Policy Research Institute (Bangladesh), Institute for Integrated Development Studies (Nepal), and Tenzin Norbhu (Bhutan). Our primary focus is on advancing understanding and shaping policies that facilitate the responsible exchange of data while addressing key concerns such as privacy, security, and data protection.

We are exploring this from a regional lens as South Asia is one of the least integrated regions in the world; the World Bank estimates that despite significant movement of people across South Asian borders, intra-regional trade remains low at just 5% of total trade flows within the region. This stands in contrast to other regions such as Southeast Asia (25%), Europe (60%), and East Asia (35%). However, immense potential has been identified for increased regional integration in South Asia. Digital integration can significantly enhance efficiency in various services such as less expensive remittances and electronic health records usable across countries. Moreover, it can facilitate better signalling of skills through cross-border recognition of work credentials and education qualifications, while also reducing transaction costs, such as shorter wait times for goods at border crossings through e-manifests.

While some initiatives have been implemented at a bilateral level, unlocking the full potential of digital integration requires broader regional cooperation to realise the larger gains possible. This regional initiative led by World Bank aims to address this disparity by shaping policies towards increased regional integration and unlocking the potential for enhanced efficiency in services and reduced transaction costs. The think tank network has met several times to align the efforts of various stakeholders, assess the progress made thus far, and chart a comprehensive timeline moving forward. The following photo is from a recent meeting held in Colombo in February 2024.