The Industrial Internet can accelerate access to healthcare, water and energy — if data can move freely across the globe.

Today I've invited my colleague Thaddeus Burns, GE's senior IP and trade counsel, to contribute his thoughts on how the Industrial Internet can transform the world, especially in developing countries. He wrote the below with Sebastian Lohse. We would love to hear your thoughts and reactions in the responses below or on Twitter.

In  September 2015, 193 countries adopted the UN Sustainable Development Goals (SDGs). The 17 SDGs constitute the most ambitious global agenda ever developed for the social, economic and environmental advancement of the world. They include the objectives to end poverty, abolish hunger, accomplish gender equality, foster equitable economic growth, reduce inequality and address climate change — by 2030 or earlier.

Significant gaps towards achieving these goals persist in all, but especially in the developing countries. The   digital economy can contribute to closing the SDG achievement gaps in three ways:

1. IT solutions spread and are adopted at unprecedented speed.  They permit a very rapid deployment of technology to some of the poorest people in the world, thereby improving access and participation opportunities. A case in point: just 23 years after the first digital mobile phone entered the market, digital networks already cover 70% of Sub-Saharan Africa.
2. Digital technologies place people at the center  of products and services, allowing for attractive offerings due to reduced costs, improved sustainability, and user-friendliness. For example, in least developed countries, some health workers are beginning to use mobile-based programs to learn how to administer new treatments.
3. Technologies at issue  enable new business models  that enhance innovation and growth in a wide range of sectors.

The Industrial Internet is expected to transform many industries, producing ground-breaking benefits to the economy and the society on a global scale. While forecast reports vary, according to one study  the Industrial Internet will have a potential economic impact of between $3.9 trillion and $11.1 trillion per year in 2025 , which arises mainly from productivity improvements to equipment maintenance, inventory optimization, energy savings and labor efficiencies. Marco has done a lot of work on this too.

IoT infrastructures rely on remote data collection, analysis and management facilities, which are often situated in different jurisdictions. However, over the last two decades, governments have increasingly imposed restrictions on flow of data across borders, offering a variety of justifications, such as the public order, privacy, national security, and domestic growth. The barriers include localization requirements, filtering, and specific regulations to protect privacy. Such  impediments to cross-border flows erode the spectacular economic potential of the Industrial Internet .

In this analysis, we try to do three things:

1. Underscore the importance of the Industrial Internet for sustainable development.
2. Point to the challenges that arise from restrictions on international data flows.
3. Propose a range of plausible measures to eliminate these obstacles so as to ensure that the Industrial Internet can effectively contribute to achieving the SDGs.

Driving growth

The Industrial Internet   is one of the game-changers in the 21st century. A recent study projects that Industrial Internet technologies could increase the real GDP of the countries studied by 1.5% by 2030 (provided they build capacity to absorb these technologies and increase Industrial Internet investment).

Another recent study by the World Economic Forum has identified four major types of transformations the Industrial Internet will bring about in the economy and the society at large.

First, due to predictive maintenance and remote management, the Industrial Internet  significantly enhances operational efficiency , such as improved uptime and asset utilization. Industrial systems can adjust not only to their own environments but also their own "well-being": instead of running to failure, machines schedule their own maintenance or modify their control algorithms dynamically to compensate for a worn part before and to communicate that data to other machines and humans who rely on those machines.

Second, the Industrial Internet  allows businesses to shift from products to outcome-based services , delivering measurable results to customers. Such outcomes may include guaranteed machine uptimes on factory floors, actual amounts of energy savings in commercial buildings, and guaranteed crop yields from a specific parcel of farmland.

Third, delivering such outcomes will  require new forms of collaboration between business partners , allowing them to combine their products and services to meet customer needs. New cloud-based software platforms will facilitate data capture, aggregation and exchange across the economy.

Fourth, the Industrial Internet will drive growth in productivity by presenting  new opportunities for people to enhance skills . It will also create new types of jobs. Most business leaders are convinced that the growing use of "digital labor" in the form of smart sensors, intelligent assistants and robots will  profoundly transform the skills mix and focus of the workforce;  87% believe that the Industrial Internet will contribute to long-term job growth.

Driving development

The Industrial Internet can make a considerable contribution to meet the SDGs. As the examples given below illustrate, it advances human wellbeing in a range or areas such as healthcare, water, agriculture and livelihoods, natural resource management, energy and infrastructure.

Health: E nsure healthy lives and promote well-being for all at all ages (SDG 3)

Industrial Internet technologies allow personalizing treatments, collecting clinical data beyond the occasional patient-doctor visits, detecting earlier and proactively treating disease progression, and finding more effective cure for a range of intractable conditions.

IoT technologies are also being used to address immediate challenges in humanitarian response. A case in point is Sensor Technology and Analytics to Monitor, Predict, and Protect Ebola Patients (STAMP2), which has been tested on Ebola patients in the United States. Currently it is being scaled up to meet the needs of government agencies such as USAID for its Ebola treatment strategy in Liberia.

STAMP2 collects patient data, including ECG, heart rate, oxygen saturation, body temperature, respiratory rate, and position. These data are sent to a central server to support response to disease outbreak. These data are sent to a central server platform so they can be monitored and analyzed over a long period of time and alert physicians of abnormal changes in a patient's behavior or health Deploying solutions such as the STAMP2 sensor improves the Ebola response by decreasing emergency response time in critical areas and enabling emergency responders to detect Ebola patients earlier and monitor them more efficiently.

Water:  Ensure availability and sustainable management of water and sanitation for all (SDG 6)

Industrial Internet solutions can improve clean water delivery and sanitation, of which 1–2 billion people worldwide are deprived. For instance, Sarvajal, an Indian social enterprise, has developed low-cost reverse osmosis technology to provide clean water in rural areas, as well as smart meters to remotely monitor the quality and quantity of water.

Moreover, a wireless sensor network (WSN) is being used in the country to improve water management in poor and semi-arid areas. The wireless net measures temperature, humidity, soil moisture, ambient light, and barometric pressure in rural Karnataka. Data from the sensors are visualized on the website for real-time monitoring.

Agriculture and Livelihoods:  End hunger, achieve food security and improve nutrition, and promote sustainable agriculture (SDG 2)

Gamaya, a Swiss company, uses Industrial Internet technologies to provide solutions in precision agriculture, a farming management technique based on observing, measuring and responding to inter- and intra-field variability in crops.

Images of a field taken from a drone are analyzed by specialized software, which categorizes the land according to crop concentration. The output file is uploaded to the tractor, which passes over the land and dispenses varying levels of fertilizer. Although self-navigating, the tractor overlaps only a few centimeters of land when making its rounds. Gamaya offers analogous solutions for seeding and harvesting, which make use of sensor data on soil content and moisture. All measures combined result in a 30% reduction of fertilizer and chemical usage, a 7–25% increase in crop yield and a 50% decrease in disease- and weed-related losses.

Energy/Infrastructure  Ensure access to affordable, reliable, sustainable, and modern energy for all (SDG 7); Make cities and human settlements inclusive, safe, resilient and sustainable (SDG 9)

Industrial Internet technologies make wind power generation more efficient. GE offers its clients Industrial Internet-based solutions which use data produced from across the wind farm in real time. The technology allows individual turbines to communicate directly with each other, sharing data about the real-time wind conditions. Drawing on this information, turbines can adjust blade angles and turbine settings to maximize their degree of efficiency.

The Industrial Internet also enables Smart Cities — urban settlements, that aim to make a better use of the public resources, increasing the quality of the services offered to the citizens, while reducing the operational costs of the public administrations.

For example, the Siemens Intelligent Parking Solution relies on a sensor system — constantly gathering information on the parking situation — that keeps drivers informed from their point of origin to their final destination, making it easier to plan a trip more intelligently, find a parking place and to commute more intelligently. The system uses a combination of ground and overhead sensors to collect real-time parking space availability information, while taking vehicle size requirements into account.

Why free movement of data matters

The Industrial Internet involves huge volumes of created or captured information that require extensive cloud-based facilities for storage, analysis and management. Rather than being restricted to a single jurisdiction, these essential Industrial Internet infrastructures tend to be distributed around the world due to several factors, such as local workload, environmental conditions (e.g. temperature, sun light), and availability of skilled workforce.

Most importantly, only sizeable data infrastructures permit economies of scale, which significantly reduce the costs of offering Industrial Internet solutions. Therefore,  unrestricted flow of information across national borders forms a key prerequisite for the effective use and worldwide adoption of the Industrial Interne t, allowing it in particular to unfold its enormous potential for sustainable development on a global scale.

However, in recent years, governments have been erecting borders in cyberspace, resorting in particular to data localization requirements. Specifically designed to impede the transfer of data across national borders, these types of measures take different forms: rules that prohibit information to be sent outside the country, that subordinate such data transfers to the express consent of the data subject, that require copies of information to be stored domestically, or that provide for taxation of exported data.

To justify restrictions to cross-border data flows, governments offer a variety of reasons, in particular, domestic growth, privacy, and security. Upon closer inspection, restrictions on cross-border data flows more often interfere with each of these goals.

One motivation for restricting cross-border data flows, often unstated explicitly, is to advance domestic economic development. Like most protectionist measures, such limitations bring only small gains for a limited number of local companies and workers.

At the same time,  measures to curb cross-border data flows increase costs for the majority of domestic businesses and customers , especially due to reduced economies of scale. Furthermore, they deprive local actors of access to global services that might improve productivity and enhance innovation. In addition, localization requirements may compromise international trade in goods and services, which hinges upon the unconstrained transfer of data.

A further argument stated in favor of restricting data flows involves cybersecurity — protecting information against criminal activities on the part of governmental or nongovernmental entities abroad. In reality, however,  restrictions on cross-border data flows can render the data more vulnerable .

Entities active in the global market are exposed to international competition as well as the ever-rising sophistication of cybercriminals, which are two key incentives to constantly enhance their own security level. On the other hand, localized data servers facilitate possible attacks in that they reduce the possibility to distribute information and security fixes across servers in different locations.

Finally,  personal privacy concerns  represent another stated reason to limit data flows across international borders. They are legitimate if they relate to the need to protect personal data, i.e., information pertaining to an identified or identifiable natural person.

For instance, under Australian law, in order to protect the citizens' privacy and security, e-health record systems must deploy local data centers. In Canada, the legislation in the provinces of British Columbia and Nova Scotia provides that personal information held by public institutions (i.e., schools, universities, hospitals, government-owned utilities, public agencies) to be stored and accessed only in Canada.

Healthcare records disclosed to third parties could potentially affect insurance policies and future employment prospects. However, in the context of the Industrial Internet, apprehensions with regard to privacy are largely unfounded given that, to an overwhelming extent, the Industrial Internet relies on machine-to-machine communication of data necessary for the optimal operation of machines (e.g. to verify if the machine is functioning, dispensing properly, or if the most recent updates have been loaded).

The use of personal information often aims to make the machine work better, lower radiation or incidence of disease, or to develop aggregate models of care. To minimize risk of re-use,  personal information from on Internet connected devices may be aggregated, allowing for the data to be used for research without posing significant privacy risk to individuals . Narrowly tailored data privacy rules — instead of general data localization requirements — could address the relatively small proportion of cases where Industrial Internet technologies collect and process personal information.

Possible solutions

The Industrial Internet can make a significant contribution to sustainable development, in particular helping the international community to meet the ambitious SDG agenda by 2030. Given the critical importance of free cross-border data flows for the Industrial Internet,  governments and other stakeholders should join forces to remove obstacles  that exist in that regard, while taking legitimate concerns about data privacy into account.

Both binding and enforceable, international trade agreements constitute appropriate instruments to introduce relevant rules. It will be crucial to achieve a critical mass, that is, to ensure the participation of all major economies. The authors of this paper suggest that policymakers consider the following approaches:

1. develop a plurilateral digital trade agreement at WTO, including a horizontal discipline to deal with all data-related aspects of trades in goods and services;
2. expand and implement the WTO Trade Facilitation Agreement to support digital trade;
3. make permanent the moratorium on customs duties on electronic transmissions;
4. clarify the application of WTO members' GATS commitments on digital trade;
5. use the provisions on the free flow of data in the Trans-Pacific Partnership Agreement (TPP) as a model for future international trade agreements; and
6. integrate in the Trade in Services Agreement (TISA) a proposal by Canada, Colombia, Japan, Taiwan, and the US, which would prohibit parties from blocking cross-border information transfers, including personal information when the activity is carried out in connection with the service supplier's business.

This article first appeared on GE's (Chief) Economist Marco Annunziata's Medium page.