COVID-19 and the Unsettled Questions of Digital Governance

A meeting on e-commerce at the World Trade Organisation, source: WTO photos

How will ongoing debates on digital governance shape the future of digital development?

One of the important implications of the COVID-19 pandemic has been the further acceleration of growth in the digital economy and the expansion of cross-border digital flows. Driven by the pandemic, large and small businesses across the world adapted their business models by shifting completely or partially to internet-based models. As a result, digital transactions, within and across countries, increased dramatically over the last couple of years. While measurement of such flows is challenging, some reports estimate that global Internet Protocol (IP) traffic was expected to more than triple between 2017 and 2022 and that domestic and international IP traffic in 2022 will exceed all Internet traffic up to 2016.

This growth has intensified the debates around digital governance. These debates have begun prior to the pandemic as the growth in the digital economy on the one hand and the move by some states to adopt “interventionist” digital policies drove intense discussions on how to govern the digital world and where to draw the line between sovereignty of states on the one hand and the need to adopt international rules and norms to maintain the global nature of the digital world.

The success of some countries, particularly China, in building digital capacities and firms through selective, and often limited, integration in the global digital market have intensified those debates as other countries began to look to the Chinese model as a guidance for their digital strategies. As a result, questions around the appropriate forum to govern digital issues, the limits of state power vis-à-vis international rules and norms, and the applicability of such rules to different economies have dominated digital policy debates for a number of years. Some of those debates have taken place within regional blocs such as the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) while others have taken place within international bodies that are focused on digital governance such as the Internet Governance Forum (IGF).

While these debates continued in different forums, a difficult link between digital governance and the international trading system was established largely as a result of pressure from the advanced economies. Issues such as data flows, source code and algorithms, and cybersecurity, amongst others, became increasingly linked to trade regimes with recent trade agreements adopting digital chapters that include rules on a range of digital issues.

While the link between trade agreements and the digital world is not always clear (while some cross-border flows are trade flows, a huge percentage of these flows are not trade-related, and the two are very difficult to separate), the trade regime offered an established forum with the ability to produce binding and enforceable rules to govern the digital space. Today, negotiations on digital issues continue in a number of multilateral, regional, and bilateral trade forums as states pursue different visions of the digital economy and how to govern digital flows. The advanced economies, in particular the United States, the EU, Japan, and Australia in addition to emerging economies such as India and China are the key drivers of these processes.

The implications of such processes for development issues are profound, and often overlooked. The economic and social value of data, for instance, is not yet fully understood and, as such, it is unclear what adopting binding international rules around data flows will exactly entail. Some argue that developing countries will benefit from global open data policies as it gives them an opportunity to integrate in the digital economy and to achieve technological progress. Others, however, question this position and argue that developing countries should resist any rules that could undermine their policy space to adopt digital policies. As discussions on these issues continue in different forums, more engagement from digital development scholars is needed.

In the context of the dramatic expansion of the digital economy driven by the pandemic, better understanding the implications of digital governance for digital development particularly in lower-income and smaller developing countries is crucial to help shape the processes driving digital governance and to ensure that digital rules do not undermine the objectives of economic and social development that are increasingly tied to digital issues in today’s world.

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