Safety or Self-Interest? The Political Economy of State Travel

Advisories

Steven LiaoBrenton Peterson

University of Virginia

Travel Advisories Hit Poor, Tourism-Dependent Countries

GDP per capita and tourism as a percentage of exports. Countries marked in orange were under a travel advisory from the United Kingdom in 2007.

Consequences for: Tourism SectorLinkages throughout economyInvestment Flows?

• British travel advisory cost Kenya an estimated $167 million

• About 1% of Kenyan GDP

– Falling visitor numbers

– Cut-flower industry – cancelled orders and higher freight costs

– Institutional (firm, university) restrictions on traveling to countries under advisory

TAs are a Non-Tariff Barrier

• Barrier to trade in services

– Tourism sector = 5.6 to 7.3 percent of world trade from 2000 to 2010

• Non-tariff barrier

• Unilateral implementation

– No IO oversight

– Limited domestic political process

Advisories are Disputed by Target Countries

• EU Travel Alert regarding US swine flu outbreak

– US Officials called it:

• “Hysterical”

• “Unwarranted”

• “An overreaction"(Afrasiabi 2009)

Safety Considerations Cannot Explain Variation

Figure 2: Significant variation in the application of travel advisories exists across sending countries. If safety were the sole consideration, we

would expect very similar advisories across sending countries.

Travel Advisories are Politically Motivated

• A Theory of Economic Linkages

– Exports from sending country to target country reduces the odds of an advisory

– Two mechanisms

• Consumers in target countries will be hurt financially by travel advisory; income effects dampen demand for the sending countries’ exports

• Travel advisory is a perceived affront; consumers in target countries might retaliate explicitly against the sending countries’ exports

An Empirical Model of Travel Advisory Implementation

• Travel Advisory: Dichotomous variable– Three “sending” countries

• Australia, UK, US• 2005-2007

– 140+ potential “target” countries– Source: Archive.org copies of agency websites

• Unit of Analysis: Dyad-year

• LPM with target country-year fixed effects– Probit requires more data for full FE model– Controls for the cause of the TA (civil conflict, unrest)– Control for similarity in UN voting record

Exports Reduce Likelihood of Advisories

Table 1: Outward FDI stock, exports and imports in thousands of US dollars

Conclusions:Variety of NTBs demand further attention• Travel advisories are political• Highlight a non-tariff barrier to trade in services

• Unilateral in nature

• Extend to probit, count models, with many more sending countries and years

• True consequences of travel advisories?– Working on disentangling the effect of advisories from

the effect of the conflict/unrest that caused the advisory• Daily bond and equity fund flows data

The End

Thank you!

Countries Targeted by US, 2005-20072005 2006 2007Afghanistan Afghanistan Afghanistan

Algeria Algeria Algeria

Bolivia Bosnia and Herz Bosnia and Herz

Bosnia and Herz Burundi Burundi

Burundi Central African Republic Central African Republic

Central African Republic Chad Chad

Colombia Colombia Colombia

Congo Cuba DRC

Cuba DRC East Timor

DRC East Timor Eritrea

Guyana Eritrea Guinea

Haiti Haiti Haiti

Indonesia Indonesia Indonesia

Iran Iran Iran

Iraq Iraq Iraq

Israel Israel Israel

Ivory Coast Ivory Coast Ivory Coast

Jamaica Kenya Kenya

Kenya Lebanon Lebanon

Kyrgyzstan Liberia Liberia

Lebanon Nepal Nepal

Liberia Nigeria Nigeria

Libya Pakistan Pakistan

Nepal Philippines Philippines

Nigeria Saudi Arabia Saudi Arabia

Pakistan Somalia Somalia

Philippines Sri Lanka Sri Lanka

Saudi Arabia Sudan Sudan

Somalia Syria Syria

Sudan Uzbekistan Uzbekistan

Togo Yemen Yemen

Uzbekistan Zimbabwe

Yemen

Zimbabwe

Countries Targeted by UK, 2005-20072005 2006 2007Afghanistan Afghanistan AfghanistanAlbania Albania AlbaniaAlgeria Algeria AlgeriaAngola Angola AngolaArmenia Armenia ArmeniaAzerbaijan Azerbaijan AzerbaijanBangladesh Bangladesh BangladeshBolivia Burundi BurundiBurundi Cameroon CameroonCameroon Central African Republic Central African RepublicCentral African Republic Chad ChadChad Colombia ColombiaColombia Congo CongoCongo DRC DRCDRC East Timor East TimorEcuador Ecuador EritreaEritrea Eritrea EthiopiaEthiopia Ethiopia FijiGeorgia Fiji GeorgiaGuinea Georgia GuineaGuinea-Bissau Guinea HaitiGuyana Haiti IndiaHaiti India IndonesiaIndia Indonesia IranIndonesia Iran IraqIran Iraq IsraelIraq Israel Ivory CoastIsrael Ivory Coast LebanonIvory Coast Lebanon LiberiaKyrgyzstan Liberia LibyaLebanon Libya MaliLiberia Mali MauritaniaLibya Mauritania MexicoMali Mexico MyanmarNicaragua Nepal NicaraguaNiger Niger NigerNigeria Nigeria NigeriaPakistan Pakistan PakistanPhilippines Philippines PhilippinesRussia Russia RussiaRwanda Rwanda RwandaSierra Leone Solomon Islands SomaliaSomalia Somalia Sri LankaSri Lanka Sri Lanka SudanSudan Sudan ThailandTajikistan Thailand UgandaThailand Uganda UzbekistanTogo Uzbekistan YemenUganda Vanuatu ZambiaUzbekistan YemenVanuatu ZambiaYemenZambia

Countries Targeted by AUS, 2005-20072005 2006 2007Afghanistan Afghanistan AfghanistanAlgeria Angola AlgeriaAngola Burundi AngolaBurundi Central African Republic BangladeshCentral African Republic Colombia BurundiColombia DRC Central African RepublicDRC East Timor ColombiaEthiopia Fiji DRCHaiti Haiti East TimorIndonesia Indonesia EritreaIraq Iraq EthiopiaIsrael Israel FijiIvory Coast Ivory Coast GuineaKyrgyzstan Jordan HaitiLiberia Lebanon IndonesiaNepal Liberia IraqPakistan Nepal IsraelSaudi Arabia Pakistan Ivory CoastSomalia Saudi Arabia LebanonSudan Solomon Islands LiberiaTogo Somalia MyanmarYemen Sri Lanka Nepal

Sudan NigeriaSyria PakistanYemen Saudi Arabia

Solomon IslandsSomaliaSri LankaSudanSyriaYemenZimbabwe

Politicians Speak Out Regarding Travel Advisories

• Rep. Gregory Meeks (D-NY)

– TA against Kenya is “discriminative”

• EU travel alert regarding US swine flu outbreak

– ‘“Hysterical", "unwarranted", "overreaction" and "ineffective", were the top choices of words used by US officials’ (Afrasiabi 2009)

Summary Statistics, Key Variables