Could the Recently Enacted Data Localization Requirements in Russia Backfire?

22 Pages Posted: 11 Jul 2015 Last revised: 8 Oct 2016

See all articles by Iva Mihaylova

Iva Mihaylova

University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research

Date Written: July 11, 2015

Abstract

In the wake of ex-NSA contractor Edward Snowden’s surveillance revelations to the global public, and despite an unimpeded cross-border data flow and knowledge transfer being a pre-requisite for the development of the digital economy, governments around the world are increasingly tending to resort to mandatory local data storage and to restrictions and bans on data transfers in a rather drastic attempt to protect their citizens’ data security and privacy. This paper discusses the legal and economic aspects of the recently enacted data localization requirements in the Russian Federation, as well as the consequences for costs, uncertainty, and the hampering of business activities that may arise if they are applied unaltered. A principal conclusion reached is that a less extreme solution that adheres to or builds upon the existing global practices and takes into account non-economic goals should be considered. The study concludes with recommendations on the basis of two questions. First, can other countries offer Russia less extreme solutions in terms of uncertainty and financial expenditure? Second, how can Russia benefit from subject-related international cooperation?

Keywords: data localisation requirements, digital economy, data security, data privacy, Internet, national security, Russia

JEL Classification: F13, F15, H2, O14

Suggested Citation

Mihaylova, Iva, Could the Recently Enacted Data Localization Requirements in Russia Backfire? (July 11, 2015). U. of St. Gallen Law & Economics Working Paper No. 2015-07. Available at SSRN: https://ssrn.com/abstract=2629533 or http://dx.doi.org/10.2139/ssrn.2629533

Iva Mihaylova (Contact Author)

University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research ( email )

Bodanstrasse 8
St. Gallen, 9000
Switzerland
+41-71-224 23 39 (Phone)
+41-71-224 22 98 (Fax)

HOME PAGE: http://www.unisg.ch

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