The Heterogeneous Effects of Data Transfer Restrictions on Data Centre Geography

Otto Kässi and Vili Lehdonvirta

No be5xd_v1, SocArXiv from Center for Open Science

Abstract: Restrictions on cross-border transfers of personal data are a non-tariff barrier to trade in data-processing services. We study whether the barrier moves computation onshore, and in which countries. We combine a country–year panel of data-centre openings in 158 countries with a new classification of national transfer regimes, and estimate event studies around the first adoption of GDPR-level rules. The response concentrates where compliance- exposed market size is large: openings rise 49% above the pre-treatment mean in downstream economies and 32% in high-GDP economies; the unconditional average is only weakly pos- itive and imprecise. Crypto data centres, which fall outside personal-data law, do not respond. We develop a compliance-quota model of investment location, in which tightening can reduce total compute while raising domestic data-centre investment.

Date: 2026-08-24
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:be5xd_v1

DOI: 10.31235/osf.io/be5xd_v1

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