Economic Impacts of Visa Restrictions on Tourism: A Case of Two Events in China

Abstract

Increasing attention has been paid to evaluate the impacts of large scale events on tourism demand. For providing policy suggestions, it should consider the economic impact of both events themselves and other factors. This paper evaluates the economic effects of visa restrictions on tourism as a result of the 1989 Tian'an Men Square Incident and the 2008 Beijing Olympic Games by using an innovative combination of econometric and computable general equilibrium (CGE) models. The results show that both events generated economic losses. The unexpected negative economic impact of the Beijing Olympics seems attributable to visa restrictions. Suggestions for the alleviation of the negative impact of visa regulations are provided.

The Distributional Effect of Events on Rural and Urban Households in China

“…Following Li and Song (2013), this study adopts a combined approach that consists of econometric and CGE modeling. This approach is supported by Blake et al (2006).…”

“…The crowding-out effects due to the Games themselves caused a further welfare loss equivalent to US$44,337 million 1 (Li and Song 2013). However, Li and Song (2013) do not show the distribution of the welfare loss between rural and urban households, so the policy implications for the two household groups have not yet been evaluated.…”

“…Compared with the eager anticipation of the Games, the less-than-impressive turnover was mainly attributed to stringent visa regulations before the Games, along with a series of events that caused crises or disasters, such as the torch-relay protests, an alleged terrorist plot, and the Sichuan earthquake in 2008 (Li and Song 2013;Song, Gartner, and Tasci 2012).…”

“…For example, the CGE method recognizes the constraints placed on factors of production when businesses operate at or near full capacity (Li and Song 2013;Stabler, Papatheodorou, and Sinclair 2009). Therefore, the CGE method allows for price changes in the commodity and factor markets.…”

“…The economic effects of tourism are most commonly evaluated using the input-output (I-O) and CGE methods (Li and Song 2013;Stabler, Papatheodorou, and Sinclair 2009). Both methods incorporate the links between different sectors within an economy.…”