Partnering for Inclusive Growth: From Digital Divide to Digital Dividend

by Carlos J. Menendez, President Enterprise Partnerships, Mastercard

For all of us, travel is a way to escape from the day-to-day grind. Yet, for nearly 300 million people across the globe — representing one in every 10 jobs — travel-related activities provide work and income, making the tourism industry one of the largest global employers.

Over the last 50 years, the industry has invested billions of dollars in destinations — often laying the foundation for broader economic development. As the world has become smaller and as almost every corner of the globe is more accessible for many, the UN Year of Sustainable Tourism for Development is a reminder that more work is needed to channel the positive forces of travel and tourism.

Tourism is already a vital sector for development across all continents. In countries like the UK, Greece and Thailand, it accounts for between 3.4 to 9.2 percent of GDP, according to the World Travel & Tourism Council (WTTC). However, the economic benefits of tourism are not always shared equally — it is the big cities or those with the main tourist attractions that reap most, if not all, of the benefits. Anyone interested in promoting tourism as a development strategy should consider ways to more equitably spread the benefits throughout a country. Looked at through this lens, Sustainable Development Goals such as responsible use of natural resources, the broad creation of quality jobs and poverty reduction are all closely related.

An analysis of international tourist spending conducted by Harvard’s Center for International Development in collaboration with the Mastercard Center for Inclusive Growth recently compared two countries, Colombia and the Netherlands. The top five destinations in Colombia account for 80 percent of total tourist spending. In comparison, tourist spending is widely dispersed in the Netherlands, with even the smallest municipality seeing a sizable number of foreign visitors. As a result, local small businesses in Colombia are less able to share the economic benefits of international tourist spending than their counterparts in the Netherlands.

Travellers are more likely to spend money in new countries where making payments is convenient and secure. When acceptance of card payments is limited to large establishments in big cities and up-market resorts, then the majority of local small businesses are missing sales opportunities. They are suffering from a digital divide — between those places that are connected to the digital payment economy and those that are not. Simply enabling greater acceptance of electronic payments in every community is one way to increase the opportunity for broader and inclusive growth.

Mastercard sees the travel and tourism industry as a key partner on that journey. How do we do that beyond increased payment acceptance? As an example, data analytics can help small entrepreneurs establish credit to scale their business. Meanwhile, globally standard contactless and mobile technologies make access to public transport easier for these travellers — bringing new destinations within reach and also decreasing their carbon footprint. Furthermore, for many of these municipalities, clear insights into consumer spending trends can inform crowd management and urban planning, reducing congestion and improving daily life for tourists and residents alike.

There’s an African proverb that says: “If you want to go fast, go alone. If you want to go far, go together.” Today’s challenges are way too big for any singular effort. At Mastercard, we believe in the power of partnering with governments, businesses, NGOs as well as organisations such as C40 Cities and WTTC.

Today’s technologies give us clear insights and easy to use tools to advance sustainable and inclusive growth. Let’s join together and embrace the opportunity to overcome a digital divide — and deliver a digital dividend into the hands of those that need it the most.

This article was contributed by a WTTC Industry Partner and published in March 2017 as part of the annual update to the Economic Impact Research from WTTC. The full report can be found here.

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