TOURIST DOLLARS ARE A MAJOR ECONOMIC CATALYST for many of the world’s countries, in some cases generating billions of dollars for local businesses, and helping sustain the employment of thousands of people.  According to the United Nations World Travel Organization, France is the world’s leading tourist destination, followed closely by the United States and Spain.  But many smaller countries are inching up the list, including Paraguay, Tajikistan, Panama and Chile. 

Colombia is another country that, for a variety of reasons, has begun to experience a surge in tourism in recent years, but how that surge is impacting specific industries in the country is a bit of a mystery.  However, a new research paper is shedding light on exactly how tourist dollars flow throughout an economic system like Colombia where, until now, it may have been nearly impossible to track.

“Our research aims at improving the way we study tourism, and its impact on local economies,” writes study co-author Michele Coscia, a researcher with the Harvard Center for International Development (CID). “Tourism is very hard to study because the expenditures tourists make are hard to track. Some are easy (hotels, resorts, etc.) but others are hard, given that tourists probably shop and dine where locals also do.”

Using data provided by the MasterCard Center for Inclusive Growth, the research team was able to examine large quantities of credit card data gleaned from records of cards issued in one country making expenditures in another. 

“With this data, it is easy to classify these expenditures as ‘tourism,’” Coscia writes. The analysis was informed by previous work in the field of ‘product space,’ a theory of product-relatedness developed by CID director Ricardo Hausmann, a co-author of the paper. “This allows us to profile tourists according to where they come from, what they do, and to create ‘Tourism Spaces’ that inform us on the possible moves tourist providers could do to increase their offers and revenues,” Coscia reports.

The ‘Tourism Space’ provides rich new data that can be used to predict which countries are more likely to start traveling to a new destination and which industries are more likely to start catering to tourists, facilitating the analysis of future growth possibilities, Coscia argues.

“Tourism represents for many countries the largest influx of foreign currency. To better understand how it works and to have an instrument to make it grow could untap great development possibilities,” he claims. “Moreover, tourism is a very labor intensive sector: it is not easy to automate and it is intrinsically related to social experiences. This means that a growing tourism sector means growing employment possibilities for disenfranchised people, leading to more inclusive economic growth.”

These unique insights were made possible by the first-ever MasterCard data grant to researchers at CID. The MasterCard grant is derived from an anonymized and aggregated data set of credit and debit 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.

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