Visa restrictions and economic globalisation

States have a general interest in facilitating the cross-border mobility of people in order to benefit from economic globalisation. Yet, mainly due to security concerns, most governments grant visa-free mobility only very selectively. Drawing on a new bilateral visa policy database covering up to 194 destination and 214 origin countries over the 1995 to 2013 period, our analysis finds that the introduction of a visa restriction by a destination country for citizens from a particular origin country deters tourism inflows by more than 20 percent. Visa restrictions also reduce bilateral trade and foreign investment, but to a smaller extent than previous studies have suggested. Exploring heterogeneity across countries, we find visa restrictions to be economically most harmful for poorer countries. We further find that some of the deterred flows in tourists, goods and services, and capital are redirected to other visa-free destinations