Internet Openness and Fragmentation: Toward Measuring the Economic Effects

The global free flow of data underpins opportunities for economic and social growth and is the essence of the concept of Internet openness. Internet openness facilitates international trade by easing communications between suppliers and customers, improving logistics and enabling formerly excluded firms to enter global value chains (GVCs). It also spurs innovation and entrepreneurship through its role as a knowledge-sharing hub; as a platform for launching new business ideas; as a place for entrepreneurs to find financing, services and marketplaces; and as part of the information and communication technology (ICT) constellation that is innovative in its own right. But Internet openness is not indisputably “good” and fragmentation (or restricted data flows) is not indisputably “bad.” To better understand the relationship between Internet openness and economic performance, the Organisation for Economic Co-operation and Development began collecting and using company data to provide a new perspective on global data flows across the Internet and their effects on indicators such as trade, innovation and entrepreneurship. From this starting point, it has begun building a picture of global data flows and laying out a path for future analyses. This paper presents an excerpt of that work. It describes the benefits of Internet openness for international trade, innovation and entrepreneurship, and presents initial steps to better measure the global data flows enabled by Internet openness.