¿De verdad quieren estar al dia las EMPRESAS?

Should Business Travel Be Obsolete?

JAN 20, 2016

 

COLOMBO – Think about it: You can call, email, and even watch your counterparty on FaceTime, Skype, or GoToMeeting. So why do companies fork out more than $1.2 trillion a year – a full 1.5% of the world’s GDP – for international business travel?

The expense is not only huge; it is also growing – at 6.5% per year, almost twice the rate of global economic growth and almost as fast as information and telecommunication services. Computing power has moved from our laptops and cellphones to the cloud, and we are all better off for it. So why do we need to move brains instead of letting those brains stay put and just sending them bytes? Why waste precious work time in the air, at security checks, and waiting for our luggage?

Before anyone starts slashing travel budgets, let’s try to understand why we need to move people rather than information. Thanks to a research collaboration on inclusive growth with MasterCard and an anonymized donation of data to the Center for International Development at Harvard University, we are starting to shed some light on this mystery. In ongoing work with Dany Bahar, Michele Coscia, and Frank Neffke, we have been able to establish some interesting stylized facts.

More populous countries have more business travel in both directions, but the volume is less than proportional to their population: a country with 100% more population than another has only about 70% more business travel. This suggests that there are economies of scale in running businesses that favor large countries.

By contrast, a country with a per capita income that is 100% higher than another receives 130% more business travelers and sends 170% more people abroad. This means that business travel tends to grow more than proportionally with the level of development.

While businesspeople travel in order to trade or invest, more than half of international business travel seems to be related to the management of foreign subsidiaries. The global economy is increasingly characterized by global firms, which need to deploy their know-how to their different locations around the world. The data show that there is almost twice the amount of travel from headquarters to subsidiaries as there is in the opposite direction. Exporters also travel twice as much as importers.

But why do we need to move the brain, not just the bytes? I can think of at least two reasons.

First, the brain has a capacity to absorb information, identify patterns, and solve problems without us being aware of how it does it. That is why we can, for example, infer other people’s goals and intentions from facial expressions, body language, intonation, and other subtle indicators that we gather unconsciously.

When we attend a meeting in person, we can listen to the body language, not just the spoken word, and we can choose where to look, not just the particular angle that the video screen shows. As a consequence, we are better able to evaluate, empathize, and bond in person than we can with today’s telecom technologies.

Second, the brain is designed to work in parallel with other brains. Many problem-solving tasks require parallel computing with brains that possess different software and information but that can coordinate their thoughts. That is why we have design teams, advisory boards, inter-agency taskforces, and other forms of group interaction.

Conference calls try to match this interaction, but it is hard to speak in turn or to see one another’s expressions when someone is talking. Conference calls have trouble replicating the intricacy of human conscious and unconscious group interactions that are critical to solve problems and accomplish tasks.

The amount of travel should then be related to the amount of know-how that needs to be moved around. Countries differ in the amount of know-how they possess, and industries differ in the amount of know-how they require. Controlling for population and per capita income, travel is significantly more intense to and from countries and industries that possess or use more know-how.

The countries that account for the most travel abroad, controlling for population, are all in Western Europe: Germany, Denmark, Belgium, Norway, and the Netherlands. Outside of Europe, the most travel-intensive countries are Canada, Israel, Singapore, and the United States, a reflection of the fact that they need to deploy many brains to make use of their diverse know-how.

Interestingly, countries in the developing world differ substantially in the amount of know-how they receive through business travel. For example, countries such as South Africa, Bulgaria, Morocco, and Mauritius receive much more know-how than countries at similar levels of development such as Peru, Colombia, Chile, Indonesia, or Sri Lanka.

The fact that firms incur the cost of business travel suggests that, for some key tasks, it is easier to move brains than it is to move the relevant information to the brains. Moreover, the fact that business travel is growing faster than the global economy suggests that output is becoming more intensive in know-how and that know-how is diffusing through brain mobility. And, finally, the huge diversity of business travel intensity suggests that some countries are deploying or demanding much more know-how than others.

Rather than celebrate their thrift, countries that are out of the business travel loop should be worried. They may be missing out on more than frequent flyer miles.

 

Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank, is Professor of the Practice of Economic Development at Harvard University, where he is also Director of the Center for International Development.

EUROPA o buenos estadistas o que el último apague la luz...

Pulling Europe Back from the Brink

 

 

 

JAN 20, 2016

 

DAVOS – In 2007, the United States caught a serious – and highly contagious – economic cold. Eight years later, it is finally making a convincing recovery – so convincing that last month the US Federal Reserve raised the country’s base interest rate for the first time in almost a decade. Europe, however, remains in bad shape. Not only has it not recovered from its post-2008 cold; beset by multiplying crises, it is now on the verge of developing pneumonia.

The best defense against pathogens is a strong immune system. And that is what Europe lacks today, in the form of political leaders who provide an inspiring and forward-looking vision to their people. With political disenchantment reaching levels not seen since the continent’s darkest times in the 1930s, the risk that Europe will succumb to the destructive forces of populism looms ever larger.

But it is too soon to give up hope; on the contrary, Europe is well positioned to succeed in the long term. To secure that future, Europe’s political class, rather than struggling to cope with crises as they arise, must begin to look at the big picture, anticipate and address challenges, and inspire people once again.

Is this too much to ask? History tells us that the answer is an emphatic no. Sixty years ago, with Europe’s economy reeling from the destruction caused by World War II, Europe’s leaders lifted their eyes above daily hardships to shape a more hopeful future, underpinned by European integration. That same vision and foresight is needed today, and the European Union, with its unmatched ability to facilitate regional cooperation, will remain essential.

Of course, there are some key differences between the circumstances that drove the EU’s creation and those that Europe’s leaders face today. Most notably, thanks to the EU, Europeans today have largely not endured war and absolute economic deprivation. With the dangers of demagoguery not embedded in their living memories, they are far more vulnerable to fear-mongering and false promises – illustrated in the growing influence of nationalist narratives and populist movements. Even worse, faced with an erosion of their voter base, many mainstream parties are playing catch-up with these destructive forces, engaging in EU-bashing of their own.

Clearly, the EU needs a new impetus that reflects twenty-first-century challenges and opportunities. But this will be virtually impossible to establish – and use to inspire people – until the EU and its member governments get a handle on the crises that are threatening to overwhelm them. That is why it is so urgent that Europe puts its economic house in order once and for all.

Such a reckoning will not be quick or easy, not least because it will require us to address the many issues that have been swept under the carpet over the years, as half-baked projects were foisted on the EU to implement. The foremost example of this is the partial economic and monetary union that has been around for nearly two decades, and that must now become a full union if it is to be successful and deliver results.

It is time for Europe’s leaders to break the decades-old habit of pursuing half-baked projects that blunt the symptoms of crises, and to implement real reforms that address the root causes. Only with a new approach – and tangible progress – can solidarity within Europe be regained.

My call for a renewed commitment to the EU does not stem from some federalist mantra. I would be the first to emphasize that political actors at all levels have a role to play in Europe, to the extent that they are able to implement policy effectively. And I would also recognize that EU institutions need reform, so that they manage the big picture, instead of the details.

Nonetheless, the EU and its institutions remain integral to efforts to respond to challenges that require a united front – challenges like those that Europe faces today.

If Europe’s leaders are to inspire their people to build a shared future, they must demonstrate an understanding of what that future has in store – and how to make the most of it. They should start by changing their attitudes and committing to working together to face present and future crises head-on. 

While we cannot know for certain what the next 10-20 years will bring, we have a few important clues. For one thing, there is the Fourth Industrial Revolution, which promises to transform our economies and societies in fundamental ways. Plenty of other transnational challenges – from addressing the root causes of the Middle East refugee crisis to implementing last month’s Paris agreement to mitigate climate change – are also in the cards.

 

It would be ironic if Europeans, enthralled by illusory promises of blissful national self-containment, threw away 60 years of deep cooperation at a moment when such cooperation is needed more than ever. Of course, self-destructive national behavior is not new. But, more often than not, leaders have managed to pull back from the brink. The key for Europe will be to deliver a coherent and compelling vision that justifies our need for cooperation in the decades ahead.

Martin Schulz is President of the European Parliament.

Feliz 2016 ???

The Europe Question in 2016

 JAN 4, 2016

 

NEW YORK – At the cusp of the new year, we face a world in which geopolitical and geo-economic risks are multiplying. Most of the Middle East is ablaze, stoking speculation that a long Sunni-Shia war (like Europe’s Thirty Years’ War between Catholics and Protestants) could be at hand. China’s rise is fueling a wide range of territorial disputes in Asia and challenging America’s strategic leadership in the region. And Russia’s invasion of Ukraine has apparently become a semi-frozen conflict, but one that could reignite at any time.

There is also the chance of another epidemic, as outbreaks of SARS, MERS, Ebola, and other infectious diseases have shown in recent years. Cyber-warfare is a looming threat as well, and non-state actors and groups are creating conflict and chaos from the Middle East to North and Sub-Saharan Africa. Last, but certainly not least, climate change is already causing significant damage, with extreme weather events becoming more frequent and lethal.

Yet it is Europe that may turn out to be the ground zero of geopolitics in 2016. For starters, a Greek exit from the eurozone may have been only postponed, not prevented, as pension and other structural reforms put the country on a collision course with its European creditors. “Grexit,” in turn, could be the beginning of the end of the monetary union, as investors would wonder which member – possibly even a core country (for example, Finland) – will be the next to leave.

If Grexit does occur, the United Kingdom’s exit from the EU may become more likely. Compared to a year ago, the probability of “Brexit” has increased, for several reasons. The recent terrorist attacks in Europe have made the UK even more isolationist, as has the migration crisis. Under Jeremy Corbyn’s leadership, Labour is more Euroskeptic. And Prime Minister David Cameron has painted himself into a corner by demanding EU reforms that even the Germans – who are sympathetic to the UK – cannot accept. To many in Britain, the EU looks like a sinking ship.

If Brexit were to occur, other dominos would fall. Scotland might decide to leave the UK, leading to the breakup of Britain. This could inspire other separatist movements – perhaps starting in Catalonia – to push even more forcefully for independence. And the EU’s Nordic members may decide that with the UK gone, they, too, would be better off leaving.

As for terrorism, the sheer number of homegrown jihadists means that the question for Europe is not whether another attack will occur, but when and where. And repeated attacks could sharply reduce business and consumer confidence and stall Europe’s fragile economic recovery.

Those who argue that the migration crisis also poses an existential threat to Europe are right. But the issue is not the million newcomers entering Europe in 2015. It is the 20 million more who are displaced, desperate, and seeking to escape violence, civil war, state failure, desertification, and economic collapse in large parts of the Middle East and Africa. If Europe is unable to find a coordinated solution to this problem and enforce a common external border, the Schengen Agreement will collapse and internal borders between the EU member states will reappear.

Meanwhile, austerity and reform fatigue on the eurozone periphery – and among non-eurozone EU members such as Hungary and Poland – is clashing with bailout fatigue in the core. Populist parties of the left and right – with their shared hostility to free trade, migration, Muslims, and globalization – are becoming more popular throughout Europe.

Syriza is in power in Greece; a leftist coalition is in office in Portugal; and the Spanish election could lead to significant political and policy uncertainty. Virulent anti-migrant, anti-Muslim parties are becoming more popular in Europe’s core, including the Netherlands, Denmark, Finland, and Sweden. In France, the far-right National Front came close to winning power in several regions earlier this month, and its leader, Marine Le Pen, may do well in the 2017 presidential election.

In Italy, moreover, Prime Minister Matteo Renzi is under attack by two anti-euro populist parties that have risen in opinion polls. And Chancellor Angela Merkel’s leadership is now under threat in Germany, following her courageous but controversial decision to allow almost a million asylum-seekers to enter the country.

In short, the distance between what Europe needs and what Europeans want is growing, and that gap could spell deep trouble in 2016. The eurozone and the EU are facing multiple threats, all of which call for a collective response. But what we are seeing is its member states increasingly adopting a national approach, thus undermining the possibility of Europe-wide solutions (the migration crisis is a tragic case in point).

Europe needs more cooperation, integration, risk sharing, and solidarity. Instead, Europeans appear to be embracing nationalism, balkanization, divergence, and disintegration.

Nouriel Roubini, a professor at NYU’s Stern School of Business and Chairman of Roubini Global Economics, was Senior Economist for International Affairs in the White House's Council of Economic Advisers during the Clinton Administration.