Fact of the Week: Engaging in Cross-Border Data Transfers Increases Firms’ Productivity by 6.1 Percent

Source: Eiichi Tomiura, Banri Ito, and Byeongwoo Kang, “Characteristics of Firms Transmitting Data Across Borders: Evidence from Japanese Firm-level Data,” May 2020, RIETI Discussion Paper Series 20-E-048.

Commentary: Cross-border data flows represent a critical component of the increasingly digital global economy. A new study of Japanese firms estimates the influence these flows have had, finding that firms which transmit data internationally increase their productivity by 6.1 percent, on average. Further, this effect grows for firms that were most productive to start with, nearly doubling to an 11.7 percent productivity increase in their case.