Economic Gains from Eliminating Travel Visas

NCPA, February 17, 2014

Current U.S. visa policy impedes economic growth, say Robert A. Lawson of Southern Methodist University Cox School of Business, Saurav Roychoudhury of Capital University, and Ryan Murphy of Southern Methodist University.

Over 42 million tourists visited the United States in 2012 after completing the required visa process. The process, however, is unnecessarily difficult for most tourists:

• First, potential visitors must fill out an online application and pay an application fee, which costs $160 per visa.
• Two separate interviews are required, one involving fingerprinting and intrusive questioning. These usually must be held at an American embassy or consulate. For many tourists, this can mean traveling a great distance. In Brazil, for example, there are only four of these locations, though the country is as large as the United States.
• The process to receive the visa can often be quick -- only 10 days -- but delays are not unusual, and visas can be denied for any reason. Tourists typically cannot plan their trips before receiving their visas.

By eliminating travel visas, the United States could see an increase of 45 million to 67 million tourists each year, which adds up to somewhere between $90 billion and $123 billion in visitor spending.

• Comparing visa requirements across countries, the authors found that a tourist visa requirement decreases the amount of tourists to a country by 70 percent.
• This would imply that tourist travel would increase three-fold if visa requirements were lifted.
• Removing the visa requirement would have the biggest impact on Mexico, Brazil and India, from whom the United States would see a respective estimated annual increase of tourists of 27 million, 1.6 million and 1.1 million.

The authors recommend that countries who pose a nonexistent or limited security threat to the United States, and countries whose citizens do not have a history of illegal immigration, be moved into the Visa Waiver Program, which allows citizens of certain countries to travel without a visa, provided that their stay is less than 90 days. Reciprocity is another option for visa reform, the idea being that the United States should not ask for visas from countries that do not require visas from Americans.

Tourism produces an economic impact similar to exports. Just as export restrictions hurt the economy, visa policies that restrict travel to the United States prevent important economic activity and wealth maximization.

Source: Robert A. Lawson, Saurav Roychoudhury, and Ryan Murphy, "The Economic Gains from Eliminating U.S. Travel Visas," Cato Institute, February 6, 2014.