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Tall paper walls: The political economy of visas and cross‐border travel

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  • Andy McKay
  • Tsegay G. Tekleselassie

Abstract

Cross‐border travel for business, personal and tourism purposes is an important component of trade in services. In 2013, travel accounted for 25% of services export in the world. Trade in services accounted for 12% of GDP in the world. Hence, the role of travel in many economies is substantial. The current paper studies the determinants of cross‐border flows of people with a particular emphasis on the role of visa policies. We adopt the UN General Assembly Affinity Index, a measure of the quality of bilateral relations between nations, to instrument for bilateral visa policy. We find that, ceteris paribus, imposing visa restrictions on a country reduces travel from that country by about 73% in 2010 implying restrictive visa policies discourage cross‐border travel significantly. This implies an adverse impact of restrictive visa policies on trade‐in‐services.

Suggested Citation

  • Andy McKay & Tsegay G. Tekleselassie, 2018. "Tall paper walls: The political economy of visas and cross‐border travel," The World Economy, Wiley Blackwell, vol. 41(11), pages 2914-2933, November.
    • Handle: RePEc:bla:worlde:v:41:y:2018:i:11:p:2914-2933
    DOI: 10.1111/twec.12686
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    Cited by:

    1. Tadao Hoshino, 2020. "A Pairwise Strategic Network Formation Model with Group Heterogeneity: With an Application to International Travel," Papers 2012.14886, arXiv.org, revised Feb 2021.
    2. Jaume Rosselló Nadal & María Santana Gallego, 2022. "Gravity models for tourism demand modeling: Empirical review and outlook," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1358-1409, December.
    3. Arif, Imran, 2019. "How Tall Are the Paper Walls? Barriers to International Mobility and Technology Diusion," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(2), October.

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