Moving toward an outcome-based approach for digital sovereignty

Digital sovereignty has become one of the most prominent – and contested – concepts shaping how lower-and-middle income countries approach an increasingly AI-driven world. At the heart of this debate is a practical reality: the infrastructure and systems underpinning their digital economies are often built, owned, or operated by actors they don’t fully control or regulate. As AI reshapes how countries deliver services, the question of navigating these links has never mattered more. 

These are legitimate policy concerns. From the Africa Declaration on Artificial Intelligence, to the India-hosted AI Impact Summit, sovereignty has become a central and recurring theme in global conversations about countries’ digital futures. But global dependencies across the digital stack present tradeoffs that few countries can ignore. The real question is therefore how to manage these tradeoffs strategically by making deliberate choices on important questions, such as where local ownership and control is worth the investment, which capabilities should be built domestically, and where integration with global infrastructure makes more sense.

The answer will look different depending on context. For a conflict-affected or small island state, sovereignty efforts may primarily mean infrastructure resilience, ensuring service continuity when systems come under stress. For an up-and-coming emerging economy with strong AI ambitions, the focus may shift toward building capacity and encouraging the growth of local AI startups.  

In either case, the starting point is articulating clear outcomes that match with a country’s own context and ambitions, then identifying how best to manage the tradeoffs involved in achieving those goals. 

Weighing up the costs of data localization

Data localization is one policy measure that illustrates these tradeoffs well. It is often argued that keeping data within borders will help protect citizens’ data rights, facilitate enforcement of existing laws, and combat extractive practices and unaccountable platform control over data. In practice, however, data localization does not necessarily create meaningful accountability – lasting data protection outcomes also depend on the robustness of regulatory frameworks, enforcement capacity and technical safeguards applied to data.  As the World Development Report 2021 noted, trust in digital systems is a crucial foundation for digital development, and a rights-based approach to protecting personal data is the foundation for this trust. 

Meanwhile, the financial costs of a blanket localization approach – requiring all data, regardless of its sensitivity or risk profile, to be stored and processed within national borders – can be significant for individuals and small- and medium-enterprises (SMEs).  Evidence from the OECD shows that strict or blanket localization requirements can significantly raise data hosting costs by 15-55%, especially for SMEs. 

Data localization shows how even a single policy choice carries several potential tradeoffs. But policymakers do not have to weigh these choices alone.

From national sovereignty goals to shared pathways

Sovereignty is not only a national pursuit. Together, developing economies with shared philosophies and interests can engage with the global digital economy from a collective position. 

Regional agreements – which the World Bank Group supports – are where this collective position comes to life. Frameworks such as the Cotonou Declaration, adopted by Ministers of Digital Economy from West and Central African countries, can help countries align their strategic and normative goals and coordinate their regulatory approaches over time. The same logic extends to public procurement reforms, where shared standards and interoperability requirements let countries collectively shape market dynamics.

Ultimately, sovereignty is about people – the citizens and communities whose lives these policies are meant to improve. Involving civil society, affected communities, private sector, and others will help surface tradeoffs that governments alone might miss. This is where the World Bank Group works alongside developing countries: helping governments define concrete outcomes, assess tradeoffs, engage with communities, and build capacity to turn aspirations into lasting digital development outcomes.

The World Bank Group is developing a forthcoming toolkit to support an outcome-based approach on digital sovereignty, providing practical guidance for countries seeking to balance these objectives with their broader development outcomes. 

Source : World Bank