The Brussels effect in Africa : is it beneficial for intra-regional trade in digital services?

Abstract

African countries are increasingly regulating personal data. The Brussels effect is strong in the region, with most African countries having adopted policies on personal data transfers and domestic data protection influenced by the European Union’s General Data Protection Regulation (GDPR). The EU model is characterised by a comprehensive data protection regime and conditions applied to transfers across borders. In addition, several African economies have implemented stricter policies on data transfers, following the control model traditionally pursued in China. Previous research indicates that policies that restrict the transfer of data across borders are linked to reduced levels of trade in digital services, while a strong data protection regime supports trade in digital services by increasing consumer trust. However, there are no empirical studies with a specific regional focus on Africa. We use information on regulatory regimes in 54 African countries to estimate with a gravity model the impact of data policies on trade in services. Our analysis shows that the Brussels effect does not appear to be beneficial in promoting intra-regional trade as both the conditions applied to transfers across borders and the presence of ambitious data protection regimes domestically are associated with lower intra-regional trade in digital services, although the results differ by income level. We estimate that a regional commitment to open data transfers within the region could lead to an increase in intra-regional trade in digital services of up to 11%, amounting to 135 million USD.