Global development finance organisation the World Bank has called for national data systems to be strengthened to realise the full potential of the data revolution to transform the lives of poor people.

It has likened data to steam-power and electricity and highlights that new systems will also be needed for these innovations to realise their economic potential.

Just as electricity itself did not result in economic development, data alone will not improve wellbeing. Data can improve social and economic outcomes, but only if they are used systematically in ways that create information that generates insights that improve lives, the World Bank's 'World Development Report 2021: Data for Better Lives' report, released on March 24, states.

From information gathered in household surveys to pixels captured by satellite images, data can inform policies and spur economic activity, serving as a powerful weapon in the fight against poverty. More data is available today than ever before, yet its value is largely untapped, the World Bank notes

Data offers tremendous potential to create value by improving programmes and policies, driving economies and empowering citizens. It is, however, also a double-edged sword, requiring a social contract that builds trust by protecting people against misuse and harm, and working toward equal access and representation. On the other hand, data accumulation can lead to a concentration of economic and political power, raising the possibility that data may be misused in ways that harm citizens.

Forging a new social contract for data is a pressing domestic policy priority that will require strengthening national data systems and engaging all stakeholders at the national level. Because of the global scale of data, some of the most challenging aspects of the social contract also call for closer international cooperation to harmonise regulations and coordinate policies bilaterally, regionally and globally, World Bank Group president David Malpass says in the foreword of the report.

Data is a resource that can be used and reused repeatedly to create more value, but there is a problem – the more data is reused, the higher the risk of abuse.

“Data governance arrangements to facilitate greater use of data while safeguarding against misuse remain in their infancy. The legal and regulatory frameworks for data are inadequate in lower-income countries, which all too often have gaps in critical safeguards, as well as shortages of data-sharing measures.

“Similarly, the data systems and infrastructure that enable interoperability and allow data to flow to more users are incomplete; less than 20% of low- and middle-income countries have modern data infrastructure such as co-location data centres and direct access to cloud computing facilities,” he highlights.

Even where nascent data systems and governance frameworks exist, a lack of institutions with the requisite administrative capacity, decision-making autonomy, and financial resources holds back their effective implementation and enforcement, the report highlighted.

“To address these concerns, the report calls for a new social contract for data — one that enables the use and reuse of data to create economic and social value, promotes equitable opportunities to benefit from data, and fosters citizens’ trust that they will not be harmed by misuse of the data they provide.”

However, in seeking such a social contract, lower-income countries are too often disadvantaged because they lack the infrastructure and skills to capture data and turn them into value; the scale and agency to participate equitably in global data markets and their governance; and the institutional and regulatory frameworks to create trust in data systems, says Malpass.

“The World Bank stands ready to support its client countries on this important and challenging agenda. The findings of this World Development Report will shape support for client countries by identifying where public and private sector investments are the most critical, defining a rich program for policy reform and technical assistance, and highlighting areas in which global initiatives can help to convene and facilitate cross-border cooperation.

“Realising the full value of data will depend on a substantial commitment and effort, and it will be difficult. But the cost of failure is a world of missed opportunities and greater inequities,” he says.

Further, the report develops a conceptual framework that links data to development through three institutional pathways. The middle pathway is the use of data by governments and international organisations to support evidence-based policy making and improved service delivery.

The top pathway is the use of data by civil society to monitor the effects of government policies and by individuals to enable them to monitor and access public and commercial services. The bottom pathway is the use of data by private firms in the production process—use that fuels their own growth as well as wider economic growth.

“One implication of the conceptual framework is that data alone cannot solve development problems: people in society, governments and firms are the central actors transforming data into useful information that can improve livelihoods and lives.

“Alongside capital, land and labour, data is also an input to the development objectives that emerge along all three pathways. But, unlike capital, land and labour, using data once does not diminish its value. Data that was initially collected with one intention can be reused for a completely different purpose.”

Because the potential of data to serve a productive use is essentially limitless, enabling the reuse and repurposing of data is critical if data are to lead to better lives. It is, thus, a central aspect of the conceptual framework, the report reveals.

In practice, however, those holding data may be unwilling to exchange data. They may have concerns about data protection and security or the need to capture returns on investments in collecting data. Or they may hope to gain market power from accumulating data to capture economies of scale or obtain any other kind of political or competitive advantage from hoarding them.

Each of the three pathways shows how data can improve lives, but those same pathways create openings for data to be used in ways that harm people.

“In theory, defining clear economic property rights over data should enable data to be traded widely on markets. But in practice, the extent of the data trade beyond the market for advertising has been limited by competing claims on ownership, tensions between the wide dissemination of data and incentives to accumulate more data for private commercial gain, and difficulties in assessing the quality and accuracy of data,” the report states.

Meanwhile, critical areas for international engagement include reform of international taxation rights for data-driven businesses, World Trade Organisation arrangements for trade in data-enabled services, regional collaboration on the development of data infrastructure, international harmonisation of technical standards to support interoperability, and bilateral collaboration on law enforcement and antitrust regulation.

“International cooperation is needed to harmonise regulations and coordinate policies so that the value of data is harnessed to benefit all, and to inform efforts toward a green, resilient and inclusive recovery,” Malpass says.