Business travel identified as driver of economic growth
Business Travel Network mapped by the Growth Lab reveals impact on the national, global economy

Date:
August 11, 2020
Source:
Harvard Kennedy School
Summary:
New research finds a direct link between a country's incoming
business travel and the growth of new and existing industries. The
findings support a Growth Lab hypothesis that moving 'knowhow'
is critical to economic growth, and business travel plays a key
part in that process.

The research also raises new concerns about the economic
implications of the international travel restrictions imposed to
combat COVID-19.



FULL STORY ==========================================================================
New research from Harvard's Growth Lab finds a direct link between a
country's incoming business travel and the growth of new and existing industries. The findings, published in the journal Nature Human Behaviour, support a Growth Lab hypothesis that moving knowhow, the tacit knowledge accumulated and transferred from brain to brain through a long process
of imitation, repetition, and feedback, is critical to economic growth,
and business travel plays a key part in that process. The research also
raises new concerns about the economic implications of the international
travel restrictions imposed to combat COVID- 19.


========================================================================== Researchers Michele Coscia and Frank Neffke, working with Growth Lab
Director Ricardo Hausmann, used anonymous transaction insights provided
by Mastercard to map the flow of global business travel. This research
is part of a collaboration between the Mastercard Center for Inclusive
Growth and the Growth Lab at the Center for International Development at Harvard Kennedy School to understand the flow and accumulation of business 'knowhow,' a key driver for inclusive economic growth. Through this
network, they created a Knowhow Index which ranks countries on incoming
and outgoing knowhow. Germany, Canada, the US, UK, and Korea are the top sources of knowhow flows, while Austria, Ireland, Switzerland, Denmark,
and Belgium received the most knowhow.

"We've been puzzled by the fact that business travel has been growing
faster than world GDP, despite the widespread adoption of alternatives
like Skype, FaceTime, email, etc.," said Hausmann, Rafik Hariri Professor
of the Practice of International Political Economy at Harvard Kennedy
School. "We posited that maybe there is a difference between moving
information and moving brains. We obviously never imagined a complete
shutdown of business travel, but the paper allows us to delve into the consequences." The team created an interactive visualization that shows
the effects of the disappearance of business travelers originating from a specific country. For example, if German businesspeople stopped traveling,
the research estimates that Austria, South Africa, Switzerland, Nigeria, Czechia, and Turkey would be most affected, and global GDP would decrease
by 4.8%.

"According to our study, the world is benefiting enormously by mobilizing
the knowhow in brains through business travel. A permanent shutdown of
this channel would probably imply a double-digit loss in global GDP,"
said Hausmann.

The research also suggests that business travel represents another
development divide. "Obstacles to business travel, such as cumbersome
visa regimes and long connections, constrain access to knowhow and limit
growth opportunities, especially in developing countries," said Frank
Neffke, research director at the Growth Lab.


========================================================================== Story Source: Materials provided by Harvard_Kennedy_School. Note:
Content may be edited for style and length.


========================================================================== Journal Reference:
1. Michele Coscia, Frank M. H. Neffke, Ricardo Hausmann. Knowledge
diffusion
in the network of international business travel. Nature Human
Behaviour, 2020; DOI: 10.1038/s41562-020-0922-x ==========================================================================

Link to news story: https://www.sciencedaily.com/releases/2020/08/200811204529.htm

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