The High Costs of Travel Visas

by on July 30, 2013 at 11:38 am in Economics, Travel, Uncategorized | Permalink

U.S. citizens are fortunate in that most European and South American countries no longer require a visa for US travelers. It’s surprising, however, how many countries continue to make it difficult to visit. Some countries don’t want visitors, of course, but even a country like India, a democracy that relies a lot on tourism, still requires costly and time-consuming visas. A new paper from Robert Lawson and Saurav Roychoudhury estimates that the cost of these restrictions can be quite large.

Using a travel visa data set developed by Lawson and Lemke (2012) and travel flow data from the World Bank and the UN’s World Tourism Organization (UNWTO), we investigate the deterrent effect of travel visa requirements on travel flows. At the aggregate level, a one standard deviation more severe travel visa regime, as measured, is associated with a 30 percent decrease in inbound travel. At the bilateral level, having a travel visa requirement on a particular country is associated with a 70% reduction in inbound travel from that country. The gains associated with eliminating travel visas appear to be very large.

Oh for the days prior to 1914 when Keynes wrote that a person could travel “without passport or other formality” throughout much of the world.

John Thacker July 30, 2013 at 11:45 am

Brazil requires a visa, as they operate on strict reciprocity. This despite the importance of tourism, especially with the upcoming World Cup.

Herbert July 31, 2013 at 3:36 am

Not true for Brits or even EU passport holders.

m July 31, 2013 at 7:19 am

The brits dont require a visa from Brazilians. Also, this is academy where general equilibrium effects are quite important. Econometric studies are less useful here, since they are about partial equilibrium effects.

Denis August 1, 2013 at 2:11 am

Brazil requires a visa from US citizens because US requires a visa from Brazilian citizens. The moment US changes this policy, Brazil will do the same.

emerson July 30, 2013 at 11:58 am

We don’t need to look all the way to India for countries that make it difficult to visit. How about the United States?

Rahul July 30, 2013 at 12:09 pm

The cost of visas is often a quid pro quo. High visa fees by places like India are often a retaliation for high visa fees by the US. The wisdom of this policy is a different issue; I’m merely laying out the official line.

Therapsid July 30, 2013 at 12:27 pm

Meanwhile, Israel wants the U.S. to grant its citizens the right to enter the U.S. without visas while not providing reciprocal treatment to all American citizens looking to travel to Israel. The White House is pushing for the double-standard, but we’ll see if Congress will comply. Hint: they will.

If Israel enters the Visa Waiver Program, it will do so in an entirely new category of “major strategic partner”, which makes sense because unlike the other nations in the program it’s not an actual ally. It also makes sense that they’d want to not treat Arab and Muslim Americans as if they’re actual Americans because they treat Arab Muslims and Christians in Israel as if they’re not actual Israelis.

Ricardo July 30, 2013 at 11:21 pm

What are you talking about? America’s Visa Waiver Program allows people from certain countries to enter the U.S. for up to three months for business or tourism purposes. A quick check on Wikipedia’s “Visa policy of Israel” page confirms that United States passport holders are allowed to enter Israel for tourism or business purposes for up to 90 days. Israel’s Ministry of Foreign Affairs also lists Americans on its list of visa exempt nationalities here: http://mfa.gov.il/MFA_Graphics/MFA%20Gallery/Consular%20forms/VisaRequirements.pdf

Rahul2 July 31, 2013 at 5:45 am

I believe it goes further than visa free entry. The other country (in this case Israel) must ensure that most if not all Americans enter freely. Israel won’t accede to this clause.

Ricardo July 31, 2013 at 7:04 am

Rahul2, I do see what you are referring to but it doesn’t make much sense to speak of any “right” to enter (language of the above comment) or the ability to “enter freely.” The United States can and does deny entry to VWP-eligible nationalities who it feels are a security threat. VWP does not grant a right to enter the United States and the entry forms people fill out makes this clear. Likewise, no American has any “right” to enter Israel as a tourist or business traveler. In both cases, a visa waiver simply means you can fly to the U.S. or Israel and ask permission to enter. The final decision is actually at the discretion of the immigration officer who interviews you at the port of entry and you can see any number of sob stories online of people who feel they were unfairly denied entry by U.S. immigration inspectors, even though they arrived on VWP-eligible passports.

It is important to point out that Israel currently does not qualify for the VWP which means the “double standard” Therapsid alluded to is exactly reversed. Most American citizens can just show up in Israel with a valid passport, round-trip ticket, etc. whenever they want and have a pretty good chance of being allowed in. Israelis, by contrast, are legally required to secure visas in advance of any travel to the United States and will be immediately denied entry if they show up at a U.S. port of entry without a visa.

Bob July 30, 2013 at 12:34 pm

The U.S. enforces one of the most strict visa policies. While visa policies among nations are frequently reciprocal, the U.S. is quite an outlier. The U.S. requires visas of about 80% of the countries in the world, while only about 40% of the world’s countries require visas of U.S. citizens.

Rahul July 30, 2013 at 12:43 pm

Depends on which of the countries can afford to (or want to) play hardball. I remember a while ago, Brazil (I think) had started fingerprinting only US tourists in retaliation of US’s fingerprinting rules.

Personally, I like these policies: It helps to pass on a little pain to Americans in hope that they can then prevail upon their politicians to streamline some of USA’s idiotic / byzantine visa & entry procedures. To a country like Brazil or India the resultant hit from lost tourist revenues are minuscule.

Mike July 30, 2013 at 1:05 pm

For me it wasn’t the fees. It was just the bureaucratic hassle. If only Americans get that treatment, they are quite amazing. I like the fact that they want you to leave your passport with the High Commission. That really made me nervous, especially since I was applying for my visa in another country.

Foobarista July 30, 2013 at 3:49 pm

Most casual travelers aren’t aware of the “reciprocity” stuff (and more frequent travelers just deal with it and find ways to make it easier, such as using travel agents to deal with the consulate and get the visa stamp), so all they see is annoying bureaucracy on the side of the target country.

prior_approval July 31, 2013 at 2:19 am

‘It helps to pass on a little pain to Americans in hope that they can then prevail upon their politicians to streamline some of USA’s idiotic / byzantine visa & entry procedures.’

Circa 80% of Americans don’t have passports, and have essentially no experience with foreign travel (admittedly, travel to Canada now resembles ‘international’ travel, but that is only true recently).

In other words, you need to be able to reach the majority of Americans who have no idea what travel is like to change the awful system that exists in the U.S. for foreign visitors.

And one of the most fundamental things you will need to do to change this system is to convince Americans that their self-image of the country that everyone wants to live in is inaccurate. Most Germans I know of have absolutely no desire to live in the U.S. if that means giving up 6 week vacations, essentially universal (here, read local as being part of universal) health care, work contracts backed by labor courts, family leave for childbearing/childraising, mandated pre-school places for 3 year and older children – the list is quite extensive, these being just a couple of concrete examples. (As for Germans living in the U.S. under German contracts – people are not as hesitant to move for a year or two, though most of the people I have known that have brought their children with them for a couple of years are happy to return to have their children grow up in a normal environment – the most concretely explained example being that of friends of friends who lived in Texas, and whose oldest daughter went to a pre-school with a no hugging policy, which they considered absolutely bizarre. As do I, as an American.)

Mark Pappas July 31, 2013 at 8:23 am

I have to plead my American ignorance of this situation. And I’m hoping I am not alone in my lack of knowledge about foreign visa requirements to come to the states as this would seem to be a hindrance for the American tourism industry. I live in a state that is highly dependent on tourism. However, I would not be shocked if a large segment of Americans, when presented the reality, would be in favor of continuing or even tightening the policies. Just look at the immigration debate to get a sense of where many people stand. Sad but true I’m afraid.

J.C. July 31, 2013 at 2:24 pm

And even in spite of these strict visa policies illegal immigration is an issue. I wonder how many people flock to India or Brazil to drastically improve their station in life even though having to live in the margins.

Claude Emer July 30, 2013 at 12:02 pm

Most countries require a travel visa from countries to which their citizens would be required a visa to travel.

Rahul2 July 31, 2013 at 5:52 am

Pretty sure that is not true.

ac July 30, 2013 at 12:14 pm

“Oh for the days prior to 1914 when Keynes wrote that a person could travel “without passport or other formality” throughout much of the world.”

The assumption being that they had the resources to do so. Surely the cost of travel has gone down sufficiently that for the average person, it is easier/more practical to travel throughout much of the world, even given visa costs.

Rahul2 July 31, 2013 at 5:47 am

The visa costs (money but also time) are not insignificant. You should do some research.

prasad July 31, 2013 at 9:27 am

I don’t see how you’re contradicting him. He’s right to say international travel is within the means (time, money whatever) of many more people today than earlier. It’s not just resources either, but also – really mainly – the existence of air travel. The fact that visas are annoying does relatively little in comparison to these huge effects, and certainly not enough to overturn them.

Vanya July 31, 2013 at 10:16 am

There is also a huge global infrastructure devoted to tourism – hotels, restaurants, tour guides, package tours, guide books, immunization shots, standardized (homogenized) food, electrical appliances, websites, apps, etc. etc. that simply did not exist in most of the world 100 years ago. In 1914 it required ingenuity, discomfort and some risk to just wander around a foreign country as a tourist.

prior_approval July 30, 2013 at 12:20 pm

‘U.S. citizens are fortunate in that most European and South American countries no longer require a visa for US travelers.’

And the U.S. requires the equivalent of a visa through the Electronic System for Travel Authorization – https://esta.cbp.dhs.gov/esta/

And don’t worry, American citizens – this program requires a fee for those wishing to travel to the U.S., a fee which also includes marketing the U.S. to foreign travellers. Yep, the U.S. government has taken a page from the MLM playbook – the more that pay, the more that will come.

‘Mr Obama signed the Travel Promotion Act (TPA) in March after announcing the ‘official’ charge of $14. The US government said at the time that the American Department of Homeland Security (DHS) had discretion to charge a fee to cover administration for the scheme. Funds raised will also help with tourism marketing campaigns.

Some 3.8million Britons travelled to America in 2009, a figure that is down from the 4million who holidayed across the Pond in 2008.

Fears that the fee could have a negative impact on visitor figures have been brushed away by Visit USA, the US tourism arm in the UK.

Kate Burgess Craddy, chair of Visit USA, told TravelMail: ‘Previously, the promotion of the US has been very piecemeal, done state-by-state, so we’re really pleased that the government is addressing the fact that they don’t have a central promotional board for the whole of the U.S.

‘We’re not so pleased that they’re going to charge the visitor, although it’s important to put the cost in context. It’s still a very small proportion of the cost of a holiday and it’s also quite comparable to what many other countries will often charge for visa tax or departure and arrival taxes.’

Thirty five nations, including the UK, are part of the Visa Waiver Program which requires them to complete an ESTA form.’ http://www.dailymail.co.uk/travel/article-1310076/US-ESTA-Visa-Waiver-Program-set-charge-9-fee.html

However, I believe the fingerprinting at the U.S. port of entry is without additional charge.

Ricardo July 31, 2013 at 1:59 am

Australia also requires Electronic Travel Authority for foreign visitors — as with the U.S., people must apply online and pay with their credit cards. In an ideal world, airlines would do this on behalf of passengers and just bake the fee into the price of a ticket. On the other hand, once you get online clearance, it is valid for a year or two and allows for unlimited entries. The whole process doesn’t seem any more onerous than making airline or hotel reservations online.

Peter July 30, 2013 at 12:24 pm

Personally, I love my collection of visas.

The Anti-Gnostic July 30, 2013 at 12:30 pm

Oh for the days prior to 1914 when Keynes wrote that a person could travel “without passport or other formality” throughout much of the world.

Yes. That’s what a world of monarchy and private property looks like. And if monarchs wanted to acquire a new people they had to do it the old-fashioned way, with blood and iron.

Taeyoung July 30, 2013 at 2:17 pm

And if monarchs wanted to acquire a new people they had to do it the old-fashioned way, with blood and iron

Really?

“Leave the waging of wars to others! But you, happy Austria, marry; for the realms which Mars awards to others, Venus transfers to you.”

Vanya July 31, 2013 at 10:19 am

And how did that work out for Austria in the end? Spain, Britain, France, Germany, and even Poland would seem to show that wars of conquest are a more durable way to forge a nation over time.

hugley July 31, 2013 at 11:07 am

it “didn’t work out” for the house of austria because of the specific factors of ideological nationalism and being on the losing side of WWI. there seems to be no “inherent” weakness to an austrian strategy of conserving “blood and iron” for the _maintenance_ of a large empire (unless one argues, perhaps, the curse of too-soon success/imperial overreach)

Autolycus July 31, 2013 at 3:31 pm

Interesting that you included Hapsburg Spain in your list of counterpoints to the success of Austrian expansion through marriage…

Vanya August 1, 2013 at 2:42 am

I did not. The Habsburgs were not the ones who consolidated Spain through conquest, the House of Trastamara did. The Trastamara legacy still lives on while the Habsburg legacy was already begining to dissolve within a century of that famous quote.

Rahul July 30, 2013 at 12:32 pm

Alex says:

“India, a democracy that relies a lot on tourism”

Is this factually correct? To my knowledge ~5% of lndian GDP comes from tourism. Not sure if that can be called “relies a lot on tourism”.

Alex Tabarrok July 30, 2013 at 12:41 pm

The World Travel and Tourism Council calculated that tourism generated $121 billion or 6.4% of the nation’s GDP in 2011. It was responsible for 39.3 million jobs, 7.9% of its total employment.

http://en.wikipedia.org/wiki/Tourism_in_India

and according to the article it could be a lot higher! A big deal for a poor country.

Rahul July 30, 2013 at 12:50 pm

Of that only 7 million are foreign tourists. Domestic tourists number 850 million a year.

Even adjusting for higher spending by a foreign tourist, I doubt more than 1% of India’s GDP comes from foreign tourists.

The share could be higher, yes. And that would be good too. But at the moment India doesn’t really “rely on (foreign) tourism” to any great extent.

Jacob A. Geller July 30, 2013 at 12:55 pm

From Wikipedia:

“The World Travel and Tourism Council calculated that tourism generated $121 billion or 6.4% of the nation’s GDP in 2011. It was responsible for 39.3 million jobs, 7.9% of its total employment. ”

http://en.wikipedia.org/wiki/Tourism_in_India

prior_approval July 30, 2013 at 12:55 pm

Pilgrimages are not a big part of American tourism or tradition.

Not that Disney isn’t working on it, mind.

Brian Donohue July 30, 2013 at 5:19 pm

Good grief. I nominate this comment for the coveted “prior_approval’s longest stretch to take a swipe at his native country” award.

Rahul2 July 31, 2013 at 5:48 am

The numbers back you up but the “cut your nose to spite your face” logic is still galling.

Jacob A. Geller July 30, 2013 at 12:47 pm

This post deserves the title “Model This.”

It cost me hundreds of dollars and many hours to get a visa from India, and I thought, many times, “this is really stupid.” It was astounding. The model I accept as a first approximation separates the interests of workers in one part of the Indian government not only from the interests the global public but more importantly from other parts of the Indian government. Call it the “troll under the bridge” model of Indian tourism. Which parts those are exactly I am not sure (i.e. I can’t say who is the troll), but I can’t imagine how else it would work.

wesmouch July 30, 2013 at 12:57 pm

You are mistaken about S America. Numerous countries require a visa of some sort including: Bolivia, Brazil, Paraguay, Argentina, and Chile.That is about half of the countries.

byomtov July 30, 2013 at 2:57 pm

I’ve visited Argentina a couple of times, and while I suppose I technically had to have a visa I got it when landing. I don’t remember what, if anything, it cost.

Does charging for a visa make sense? Well, often the prospective visitor will often be on the inelastic portion of the demand curve, so the extra charge will not reduce revenue to the country. And not all the money a tourist spends on travel goes to the host country. Think of air fare, for example. So that makes charging an even better proposition.

Rick Caird July 30, 2013 at 6:10 pm

That is not so. We were recently on a cruise which ended on Buenos Aires. Several of the people had wanted to go on to Brazil but had been unable to get visas in time.

byomtov July 30, 2013 at 6:17 pm

My comment related to Argentina, not Brazil, which I have not been to.

J.C. July 31, 2013 at 1:52 pm

Been to Argentina, Bolivia and Chile on numerous occasions and did not obtain a visa prior to departure. US citizens are given a visa upon arrival. Same applies with Ecuador, Peru, Colombia and Venezuela.

Mike July 31, 2013 at 2:15 pm

US citizens now must obtain the “visa” for Argentina in advance (via a website). It is not longer a visa on arrival. And its $160, quite a bit more than the roughly $15-30 fee that is included in the price of airfare for Peru & Colombia, for example.

Delian July 30, 2013 at 1:06 pm

Before 1914, any person travelling was a desirable guest. It isn’t anymore : most travelers are poor people.

Most visa formalities are reciprocities for the stranger country rules for immigration.

johnleemk July 30, 2013 at 2:45 pm

“Before 1914, any person travelling was a desirable guest.”

[citation needed]

Were the Chinese railroad builders in California “desirable guests”? The Chinese barred from Australia or Canada in the late 19th century “desirable guests”? How about the Mexicans who migrated to the US, hundreds of thousands who were deported in the 1930s? Or the Irish and Italian migrants to the US? The Eastern Europeans barred from entry by new US immigration laws in the 1920s? All desirable guests?

Delian July 30, 2013 at 4:55 pm

Do you mean they weren’t welcome ? A few years before, boats were specially built to carry people to America as slaves.

TMC July 30, 2013 at 8:04 pm

Specially built? I don’t think so. The Arabs already had a thriving business, and the US was not even their largest customer.

proud brasilian slaver July 31, 2013 at 11:10 am

Take *that*, Brasil! how’s that for reciprocity

Saria July 30, 2013 at 3:41 pm

At some point it hurts airlines too if citizens of certain countries can’t take those airlines to go home or wherever else because air routes transit in another country that requires “air transit” and/or “transit” visas

Rahul July 30, 2013 at 11:41 pm

Air side transit visas are the biggest scam. Charge passengers $50 for not even setting foot outside the terminal?!

Rahul2 July 31, 2013 at 5:50 am

Air-side visas were put into place to dissuade asylum claims/ refugees. Most travellers are exempt whilst transiting (at least thru europe) by virtue of having a US/ Canadian visa.

Rick Caird July 30, 2013 at 6:08 pm

Brazil has a visa requirement that is the equivalent to the US visa in cost. That is, of course, retaliation. Now, the question becomes what will that cost them in lost Olympics revenue.

m July 31, 2013 at 7:34 am

The same apply to US. As a Brazilian, it’s a price I accept to pay. Of course, I can’t talk in name of my fellow Brazilians, but I would guess that most would approve the reciprocity. We are a quite proud people, and we don’t like to think that Americans deserve a tranent that their government don’t give to us.

Also, there are general equilibrium effects and I wouldn’t count on an effect that big.

Vanya July 31, 2013 at 10:33 am

Visa prices should reflect supply and demand. There is really no substitute good available for Brazilians who want to go the US. Maybe Canada to some extent, but it’s pretty cold up there. Judging by the thriving Brazilian community living in the Boston area, the US could probably raise the price of visas for Brazilians even higher to generate more income without appreciably reducing the number of Brazilian visitors/immigrants to the US. The number of Americans who have a serious interest in visiting Brazil as tourists is probably not that large, certainly smaller than it should be, and among that group a significant number will just go to Argentina, Mexico or the Caribbean if a visa to Brazil is too expensive.

Ricardo July 30, 2013 at 11:37 pm

Rahul is correct that visa policies are related to how big a country and its economy is relative to the potential of its tourism industry. The BRIC countries (Brazil, Russia, India and China — and especially the last three) have strict visa requirements and don’t really care if some people are discouraged from visiting. International tourism is not big business for them just as it is not a pressing concern for the United States, which also notoriously gives some international tourists a hard time.

In a country like Thailand, though, tourism is near the top of the country’s agenda and they are very much concerned with making it easy for foreign tourists to visit. Thailand is a country of less than 100 million — a tenth the size of India or China — and, in good years, it sees about 10 million foreign tourists a year some of whom spend big amounts of money in comparison to Thailand’s GDP per capita. They offer visa-free or visa-on-arrival entry for a large number of nationalities as do most other countries in the region. I think even Sri Lanka has pretty lax entry requirements for most nationalities. India stands out but it’s understandable why — international tourism is just not going to make a noticeable impact in the economy the way it has in places like Thailand, Cambodia, Vietnam, etc.

Rahul July 31, 2013 at 2:05 am

Right, and its somewhat naive to think any of the BRIC economies rely on foreign tourism to any significant extent. They just don’t.

J.C. July 31, 2013 at 2:18 pm

Actually, China has significantly relaxed visa requirements and in certain gateway cities allows visa on arrival for certain nationalities.

The term “to any significant extent” that Rahul enjoys using is often deceptive and myopic. In China, at least, international tourism plays an important role in the economy. Now, you can get numbers from Google or just pull them out of thin air, but your numbers are misleading. Why would the government harp on international tourist flow, relax visa requirements, and actually push for increased international tourism if it were not important? Why would domestic airlines, all of which are over meant owned, increase their fleet and strive to expand routes to as many international destinations as they can if not important?

Your Google math skills also fail to show that even if international tourism in China only accounted for, say, 2% of GDP, given a population of 1.5+ billion the impact of losing that 2% would be very significant. Given that government control and political stability is considered of prime importance in a nation which has historically lacked those qualities, even a 1% hit to GDP would cause them concern.

Granted international tourism is not as significant for China as it is for Thailand, but it is nonetheless seen as significant.

Rahul August 1, 2013 at 5:45 am

“Actually, China has significantly relaxed visa requirements and in certain gateway cities allows visa on arrival for certain nationalities. “

Actually, so does India: e.g. Visa on arrival is extended to Japan, Singapore, Philippines, Finland, New Zealand, Indonesia and some other Asian nations.

Bender Bending Rodriguez July 31, 2013 at 5:20 pm

Papua New Guinea has an awful visa requirement: They charge you 100K (about $50 AUS) when you get off the plane (250K if you’re not a tourist). It’s damn near impossible to get kina outside of PNG, and there’s only a single ATM in the area where you wait. On top of that, they print this _HUGE_ sticker that takes a full page of your passport.

Nathan W August 1, 2013 at 10:07 am

Not surprising in the least. Tit for tat. US immigration and visa procedures treat the rest of the world like scum and charge them through the teeth.

It’s a wonder that they even let Americans visit, but the money they bring is always welcome.

artie August 1, 2013 at 10:53 am

You are of course correct, this is why the US had to implement fees on visa applications in an attempt to control the sheer volume of applications for a visa to visit and all to often stay awhile illegally in the United States. The cost of processing mountains of visa applications from all regions of the world from people trying to enter the us as students or tourists or just anyway they can was swamping the ability of the US embassies to process them, not to mention the huge cost to process them. Before charging the fee their were also many more applications with very little chance of approval, the fee has reduced the number and percentage of disapproved applications.

It wasn’t that the US didnt want people to come and visit, we were just getting overwhelmed by all the people wanting to come and stay. There are an estimated 11 million illegal immigrants in the us, it may actually be double this number, that are here now who may be granted citizenship by new immigration laws. Let me know when you see reciprocity in Brazil or India or China for that…

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Thank God for the Schengen agreement!

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