Digital Innovation in East Asia: Do Restrictive Data Policies Matter

42 Pages Posted: 28 Jan 2020 Last revised: 29 Jan 2020

See all articles by Martina Ferracane

Martina Ferracane

University of Hamburg - Institute of Law and Economics; European Centre for International Political Economy (ECIPE); University of California, Davis

Erik van der Marel

European Centre for International Political Economy (ECIPE); European Center for International Political Economy

Date Written: January 27, 2020

Abstract

Digital technologies encourage companies to innovate with new processes, goods, and services, which ultimately enhance their competitiveness in local and global markets. This paper analyzes whether a wide set of data restrictions are negatively associated with digital innovation of firms. The paper develops an index of data restrictions that measures the level of data policy restrictiveness for 15 East Asian countries over time. Using various firm-level data sets, the analysis shows that data restrictions inhibit firms' ability to innovate. The analysis takes into account that data restrictions are likely to have a greater impact in sectors that are more reliant on software. Regressions show that in countries that have more restrictive data policies, firms are less likely to use foreign technologies through licensing as part of their innovation process. Country-specific cases for which data are available also show that restrictive data policies are negatively associated with firms' likelihood of using intangible assets, such as patents and goodwill, for performing innovation (in Malaysia and China) and developing innovations as a result of research and development that are new to the market (in Vietnam). The paper concludes that open data policies are likely to foster digital innovation.

Suggested Citation

Ferracane, Martina and Marel, Erik van der, Digital Innovation in East Asia: Do Restrictive Data Policies Matter (January 27, 2020). World Bank Policy Research Working Paper No. 9124, Available at SSRN: https://ssrn.com/abstract=3526526

Martina Ferracane (Contact Author)

University of Hamburg - Institute of Law and Economics ( email )

Johnsallee 35
Hamburg, 20148
Germany

European Centre for International Political Economy (ECIPE) ( email )

Rue Belliard 4-6
Brussels, 1040
Belgium

University of California, Davis ( email )

Martin Luther King Jr. Hall
Davis, CA 95616
United States

Erik van der Marel

European Centre for International Political Economy (ECIPE) ( email )

Rue Belliard 4-6
Brussels, 1040
Belgium

European Center for International Political Economy

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