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Видеозапись семинара "Institutions and Visa Regimes"

Speaker: Leonid I. Polischuk (Professor at the Faculty of Economics, Head of the Laboratory for Applied Analysis of Institutions and Social Capital, NRU HSE)

Co-authors: Kamila Gracheva, Koen Schoors, Alexander Yarkin

October 8, ThursdayMyasnitskaya 24, building 3, room 424, 17.30. 

Stronger institutions improve economic well-being of countries’ residents, but do they also facilitate their travel abroad by lowering and perhaps completely eliminating visa barriers? Earlier literature emphasized geography, trade, tourism, economic welfare and threat of terrorism as factor affecting visa regimes, but largely neglected formal and informal institutions, and this paper is intended to fill such gap.
We divide formal institutions into two broad categories – institutions-services and institutions-rules. Institutions-services improve productivity; they are public production inputs and can be measured by government effectiveness and regulatory quality. Institutions-rules, such as the rule of law and corruption prevention, restrict unlawful and/or unproductive behavior.
We propose a theoretical model that shows that better institutions-services in “sending” countries indeed reduce visa barriers; however stronger institutions-rules make such barriers higher. The latter effect is driven by spillovers: better enforcement of the rule of law makes domestic rent-seeking less profitable and unscrupulous individuals are increasingly seeking illicit gains abroad. This affects consular officers’ priors about the likelihood of violation of visa rules, and leads to higher rate of rejection of visa applications. The model also illuminates the role of informal institutions, such as norms and values, in the “sending” country – a lack of norms and values amplifies the increase of visa barriers caused by the strengthening of institutions-rules. Put differently, formal and informal institutions complement each other as factors of visa barriers.
We test the above hypotheses by using visa refusal rates by Schengen countries, the US and the UK for the rest of the countries of the world, and show that indeed institutions-services, institutions-rules and social capital (measured by norms and values) have the predicted impact on visa regimes: visa barriers decline in the quality of institutions-service, and increase in the quality of institutions-rules; furthermore the strength of the latter effect is in inverse proportion to social capital stock. These findings are highly statistically significant and robust to various specifications of empirical models. They also hold when visa regimes are measured by the “passport power index”, i.e. the number of foreign countries that a holder of national passport can visit without a visa.
The paper shows that positive effects of improved institutions do not necessarily extend beyond national borders due to externalities inherent to international travel. Athough developed nations urge developing ones to improve their institutions, after such improvements nationals of developing countries could be less welcomed when travelling to the industrialized world.

Key words: institutions, social capital, visa barriers