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The Heterogeneous Effects of Data Transfer Restrictions on Data Centre Geography

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  • Kässi, Otto
  • Lehdonvirta, Vili

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.

Suggested Citation

  • Kässi, Otto & Lehdonvirta, Vili, 2026. "The Heterogeneous Effects of Data Transfer Restrictions on Data Centre Geography," SocArXiv be5xd_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:be5xd_v1
    DOI: 10.31235/osf.io/be5xd_v1
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