Uncovering New Insights For How Business ‘Know-How’ Impacts Economic Growth

January 20, 2016
Uncovering New Insights For How Business ‘Know-How’ Impacts Economic Growth

MasterCard data helps reveal how ‘know-how’ moves around the world

Cambridge, MA
– A unique research collaboration between the Center for International Development (CID) at Harvard University and the MasterCard Center for Inclusive Growth is uncovering new insights on the dynamics of global business travel and its impact on economies. Through the first-ever MasterCard grant of commercial insight data, researchers at CID are working to understand the flow and accumulation of business ‘know-how,’ a key driver for inclusive economic growth.

Despite advances in video and teleconference technology, corporations spent more than $1 trillion on business travel in 2014. Moreover, the expense is growing at 6.5%, almost twice the growth in world GDP.  Why? Because business travelers are a central force in the movement of know-how.

“The fact that, in spite of the tech revolution, business travel is large suggests that for some key tasks, it is easier to move the brains than it is to move the relevant information to brains,” said Ricardo Hausmann, director of the Center for International Development and senior fellow at the MasterCard Center for Inclusive Growth. “Know-how exists only in brains and it can only be acquired by rewiring the brain through a long period of imitation and repetition, the same way we learn to walk, to speak a language and to play a musical instrument.”

Researchers at CID are working to identify patterns among the countries that deliver and absorb know-how. The countries that travel abroad the most (controlling for population) are located in Northwest Europe: Denmark, Germany, Belgium, Norway and the Netherlands. Outside of Europe, the most active travelers are Canada, Israel, Singapore and the US. Countries in the developing world differ substantially in the amount of know-how received through business travel. For example, countries at similar levels of development such as South Africa, Bulgaria, Morocco and Mauritius receive much more know-how than Peru, Colombia, Chile, Indonesia or Sri Lanka.

While the flow of tangible goods and capital between countries is easy to observe in trade data, much less has been known about the interaction between business people in different countries, until now.

“This research shows how our data can help yield a better understanding of what drives inclusive growth,” said Walt Macnee, vice chairman of MasterCard and president of the MasterCard Center for Inclusive Growth. “We look forward to seeing what else can be gleaned from the data and sharing those insights with decision-makers to tackle one of the most complex and pressing challenges of our time.”

MasterCard data is also allowing CID researchers to gain a real-world view into several aspects of tourism – an important industry that provides greater job opportunities and boosts overall national income. By providing actionable insights to help design stronger tourism ecosystems and clearer paths to accessing know-how, CID ultimately hopes to help build more inclusive economies, benefiting governments, businesses and millions of people.

The MasterCard grant is derived from an anonymized and aggregated data set of commercial card transactions that CID will use only for agreed research objectives and will maintain securely and confidentially. The information is not individually identifiable, and all data is subject to standard university protections.

About the Center for International Development
The Center for International Development (CID) at Harvard University is a university-wide center that works to advance the understanding of development challenges and offer viable solutions to problems of global poverty. CID is Harvard’s leading research hub focusing on resolving the dilemmas of public policy associated with generating stable, shared, and sustainable prosperity in developing countries. Our ongoing mission is to apply knowledge to and revolutionize the world of development practice.

Contact: Chuck McKenney
Email: Chuck_McKenney@hks.harvard.edu
Phone: 617.495.8496

About the Master Card Center for Inclusive Growth
MasterCard Center for Inclusive Growth is focused on advancing equitable and sustainable economic growth and financial inclusion around the world.  As an independent subsidiary of MasterCard, we combine data, expertise, technology and philanthropic investments to empower a community of thinkers, leaders and innovators working on the front lines of inclusive growth. Follow us on Twitter @CNTR4growth.

Contact: Avni Patel
Email: Avni_Patel@mastercard.com
Phone: 914.202.5559