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Issue Q2 2016  
A methodology to estimate the costs of data regulations  
Erik van der Marel
Matthias Bauer
Hosuk Lee-Makiyama
Bert Verschelde
This paper provides a robust and significant explanation of how the costs of data regulation affect downstream industries in an economy. In doing so we first select observable regulatory barriers that explicitly inhibit the domestic and cross-border movement of data, which are currently being implemented by various governments. Second, we calculate the costs of these data regulations for domestic industries through establishing an empirical link between regulation in data and domestic downstream performance at industry level across a set of countries. As such, this paper is the first work that attempts to analyse this connection econometrically by setting up a proxy index of data regulation using a typology of existing indices of administrative barriers. We show that the type of regulations prevalent in data indeed tends to affect downstream industry performance of industries that depend more heavily on data services for the countries under consideration in our study. Finally, the negative performance outcomes as a result of data regulation in these countries are employed in a general equilibrium analysis using the Global Trade Analysis Project (GTAP) in order to estimate the impact on country-specific GDP, industry production, and foreign trade. Abstract

Regulation ; Data Flows ; Total Factor Productivity ; GTAP ; Keywords
C68 ; C54 ; D24 ; L8 ; JEL classification
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