As part of the TWAILR symposium on the United Nations Centre for Transnational Corporations (UNCTC), Wanshu Cong reflects on UNCTC analysis of cross-border data flows and what it revealed about the structural asymmetries between global North and South.
TWAILR: Reflections ~ 83/2026
Governing cross-border data flows has been one of the central issues in the data governance literature of the past decade. In an age of totalizing digitalization, international lawyers and policymakers have been debating how to liberate digital data flows to boost the world digital economy while ensuring the protection of individual rights and national security and bridging North-South digital divides (see, for example the work of Mishra or Peng). These are not new questions. About four decades ago, on the cusp of the major expansion of financial capitalism and neoliberal globalization, cross border flows of data, termed “transborder data flows” (TDF), first became a governance issue attracting the widespread attention of policymakers across the world (see, for example, Turn; Gotlieb, et. al; Fishman). The social material conditions of this phenomenon of the 1970s and 1980s are certainly incomparable to what exist now (in terms, for instance, of the velocity and volume of digital data generated, transmitted and processed, and the degree in which they are integrated in economic activities), but that is precisely why the TDF literature from the 70s and 80s is illuminating. At a time when ideas about the information society began circulating and yet the social implications of data were not firmly solidified, discussions on TDF already presaged many key questions and debates in the current data governance literature.
This Reflection pays attention to a technical paper published by the UN Center on Transnational Corporations on TDF in 1982. As a body established to ‘level the playing field’ between developing countries and transnational corporations, the Center’s approach to TDF is noteworthy given its own mandate and the particular international environment after the heyday of the Third World’s call for a New International Economic Order. Four aspects are particularly interesting.
First, the paper’s focus on the role of transnational corporations allowed for an acute appreciation of the socio-economic conditions for technological innovation in the informational sectors. TDF and associated technological developments (e.g., satellites, packet-switching and distributed networks) were not natural, but socially specific phenomena that responded to the needs of capitalist accumulation and effectively transformed capitalist social relations in the last quarter of the 20th century. This social and materialist understanding of TDF is made evident by the paper’s examinations on transnational corporations’ activities in which TDF became ‘both a commercial good and a management tool’ (p.1). The paper noted, for example, that transnational corporations created an international market for TDF ‘equipment, software and technology as well as for the production, processing, transport and distribution’ of data, and utilized TDF ‘for the rationalization of world-wide corporate management’(p.1), allowing for the decentralization (hence greater trans-nationalization) of productive activities as well as centralization of crucial decision making (pp.44-45). It is perhaps fair to say that there would be no TDF without transnational corporations and that no transnational corporations could survive without TDF.
Second and relatedly, this technical paper contextualized TDF and the emerging information economy against the background of the changing capitalist political economy of the 70s. The paper pointed out particularly two changing conditions. First, there were the rising uncertainties of the international business environment: ‘Movements in exchange rates and interest rates…became more frequent. Similarly, price movements in input markets…became more volatile for a number of products, and output markets developed differently’ (p.34). Without specifically mentioning the collapse of the Bretton Woods system, the paper here suggested that the heightened volatility of international finance since the early 1970s was a crucial factor making information an ever more critical element of value-generation. Second, there was the decreased growth rate of production in many sectors, which led to transnational corporations rationalizing their global activities. Again, this needs to be understood in light of the social background of the 1970s, namely, the stagflation in the industrialized world, which partly propelled the offshoring of manufacturing activities to the Global South, from which investment and liberalization in the information sector in the South countries also followed. In other words, while information has been generally essential for social life throughout human history, the valuation of information is historically specific: that is, the social process in which certain type and form of information and its flow became perceived as valuable in the 1970s was specific to the material changes in the world economy as differently manifested in the North and the South. This allows for a historical materialist understanding of information from the perspective of changing capitalist social relations, which stands in stark contrast to narratives about the information society or information revolution which propagated the rising economic significance of information as natural and necessary and which soon gained traction among policymakers (especially in the ICT sector) globally.
Third, the paper emphasized the structural asymmetry in the international pattern of TDF. There was evident North-South disparity reflective of the persistent coloniality of the extant international economic order: ‘To date…both access to the international data market and the utilization of the underlying technology and equipment for various purposes have remained almost exclusively confined to institutions of the developed market economies. The experience of developing countries…has been mainly one of supplying data, buying the processed data – information – and acquiring the capital goods needed for their essentially rudimentary telematics sectors’ (p.1). TDF was hence a new iteration of the unequal international division of labor in which the participation of the Global South countries was limited to suppliers of raw materials or passive consumers (pp. 46-48). Yet, unlike traditional goods, information directly affects decision-making. ‘Information is a basis of power’ (p. 51), affecting ‘national sovereignty’ and North-South relations in general beyond the economic sphere (p.59). TDF therefore raised a critical question for the South: ‘how to pursue a self-reliant development strategy?’ (p. 50). And transnational corporations, which drove the emergence of TDF, ‘contribute directly to the preservation of the existing division of labor’ (p.57).
Fourth, what is to be done? The paper’s discussion here epitomizes a reformist approach towards the Third World’s demands after the heyday of the NIEO, which underscored the severity of challenges facing the Global South and at the same time claimed that TDF could still benefit national development. Some potential benefits mentioned by the paper included greater access to crucial data and knowledge, enabling countries to monitor and evaluate their own resources, even enhancing the competitiveness of corporations from the South in the global market, and enabling greater cooperation especially between Global South countries (pp. 52-54). Here, the paper’s discussion on TDF interestingly departed from its critical appraisal as mentioned above and instead advanced a techno-neutral (or, reified) conception of TDF. As the paper put it, implications of TDF ‘depend on the ability of users to obtain access to the international data market and to utilize fully the underlying technology and equipment’ (p.52), rather than on the nature of such an international data market (which displayed structural inequality as the paper had previously noted) and the social relations in which technology is produced and embedded. Accordingly, the paper posited that TDF could be ‘applied’ (p. 52) to level the playing field for developing countries. Therefore, the close connection between TDF and exacerbated power asymmetry the paper identified was not understood as revealing any intrinsic bias of TDF. Implicitly, the task of self-reliance of the Global South became reliant on the moral possibility of transnational corporations who may or may not deliver on their promises (as Pahuja and Saunders point out, the question whether corporations are good for development is empirically unresolvable). And more fundamentally, the path of development (however defined) was confined to obtaining better terms of trade rather than transforming or upending the capitalist division of labour.
The technical paper concluded by calling for prospective and cooperative policymaking: ‘In a relatively undefined legal environment…preconditions are still favourable for a cooperative approach’ to ensure that ‘the entire international community participate in the benefits associated with; TDF (p. 83). Yet, in the post-NIEO era, the most noticeable collective initiative on TDF came not from the Global South but from the OECD — and that OECD initiative focused on the protection of personal data. No multilateral regulatory framework was designed to enable greater access and benefit-sharing of TDF for the Global South, let alone giving the Southern countries greater power over the development of TDF rather than simply its distribution. It is such enormously unequal process of informatization and the lack of collective regulatory ambition to restructure it at a crucial time of world capitalist transformation that laid the shape of the myriad divides of contemporary digitalization which we see today — and which not only concern the persistent inequality in digital inclusion and connectivity between countries, but also how different people and societies are positioned and exploited in the process of value accumulation in digitalization.
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