The State Also Rises: The Role of the State in the Age of Data

Abstract

The emergence of the data-driven economy has profound implications for the role for the state as economic agent, as regulator, and as the agent of power projection internationally to capture global rents. We focus on the role of data as a capital asset, compare the characteristics of data in this role to the corresponding factors in preceding ages – land, mass production machinery, and IP – and draw inferences for the role of the state from the transition based on the externalities, both positive and negative, to which the data-driven economy gives rise. This narrative suggests that the DDE generates novel and complex demands for governance and public sector economic engagement, which imply a significantly expanded role for the state. Our analysis supports a broadened framework for revising multilateral rules to address these issues and also suggests that a new détente will be needed between the main powers contesting rents in the rapidly evolving data-driven economy.

Keywords: data-driven economy, digital transformation, artificial intelligence, machine learning, big data, strategic trade policy, role of the state

JEL Classification: F13, F52, F55, F63, L40, L52, O30