Do Visas Hinder International Trade in Goods?

Camilo Umana Dajud

Working Papers from CEPII research center

Abstract: Travel visas impose additional costs to firms when engaging in international trade. This paper exploits a natural experiment provided by Schengen agreements to document a causal impact and examine how much trade in goods is affected. I show that visas have a large negative impact on bilateral trade flows. The introduction of a visa to enter the Schengen Space considerably reduced bilateral trade flows between Ecuador and Bolivia and members of the Schengen space. I also find that the negative impact of visas is much larger for differentiated than for homogeneous products and that visas reduce the number of new products exported to a given market. By applying a general equilibrium framework, the paper shows that removing visas would increase welfare by nearly 10% for some sub-Saharan African countries and by 1,5 % on average for developing countries. For policy makers this paper highlights the importance of including visa facilitation schemes into the provisions of trade agreements and other economic partnerships.

Keywords: International Trade; Trade Costs; Visas (search for similar items in EconPapers)
JEL-codes: F14 F23 F63 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2016-30

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