Data Center Regions and Economic Development: Implications Derived From Economic Analysis

Data Center Regions and Economic Development: Implications Derived From Economic Analysis

Murat Ali Yülek (Center for Industrial Policy and Development, Istanbul Commerce University, Istanbul, Turkey), İhsan Bostancı (Konya Plain Project Regional Development Administration, Konya, Turkey) and Koray Göksal (Yildirim Beyazit University, Ankara, Turkey)
DOI: 10.4018/IJSESD.2017100103
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Abstract

The amount of data generated worldwide has reached unprecedented levels, and its rate of growth continues to increase exponentially. Brought about by rapid advances in information technologies, as well as changes in lifestyles and business strategies, this explosion in the quantity of data has given impetus to a fast-growing demand for data storage, which, in turn, has paved the way for large-scale data centers. This article addresses the potential economic impact of the construction of a “data center region” in a developing country, using as a case study a development project in Konya, Turkey. The core focus of the analysis is on whether such a data center region could create positive spillovers that trigger further development in a developing region.
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2. The Digital Universe: The World Data Market

This section reviews the trends relating to the growth of data in today’s society and current activities to construct datacenters to store data. The latter is driven by the former. The former in turn is driven by a number of emerging factors.

2.1. The Growth of Data: The Digital Universe

The single fastest growing commodity (if it could appropriately be called so) throughout the last few decades has been information. The “digital universe,” which represents “the data we create and copy annually” (International Data Corporation-IDC, 2014) is expected to grow to 44 ZB (a zetta byte is 10004gigabytes) by 2020 from an estimated 4.4 ZB in 2013. This is an estimated compound annual growth of 39%, almost equivalent to doubling every two years.

In contrast, the world economy in real terms grows at much lower rates. The World Economic Outlook database (April 2015 version) of the International Monetary Fund (IMF)projects the average real growth rate of the world economy to be 3.8% per annum between 2013 and 2020. When compared to world GDP growth rates, the growth rate of information—and thus data—will be significantly higher during the next years and perhaps decades.

In 2014, the digital universe was driven by businesses, government and consumers. According to IDC (2014), in 2013 consumers created 0.6 ZB, or14%, of the 4.4 ZB digital universe. Businesses and government created 3.8 ZB (86%), of which 1.5 ZB was directly from businesses and the remaining 2.3 ZB was through consumers.

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