Accessing the causality among air transportation, trade openness and GDP: Evidence from a panel of high-income countries

Abstract

Over the last few decades, the contribution of efficient civil aviation has been recognized comprehensively to promote and sustain economic growth (Brugnoli et al., 2018). Air transportation can accelerate economic development through prompt access to world market, easing economic integration, and allowing effective global supply chains between nations. The dual effect of efficient air transportation can also be defined in terms of its ability to transport traded goods in quick time along with facilitating mobility of labour between countries. Apart from that, airfreight plays an important role in timely delivery of parcels, medical equipment, and other necessary goods across the globe. Airdrops are one of the efficient responses of relief organisations to humanitarian crisis (Zhang and Graham, 2020). In the geographical areas, which are adhered to weak ground and water transportation, air traffic routes are signified to as lifelines for the said regions (˙Ilarslan et al., 2018). Further, the improved air transportation creates a positive dual impact on the economy through its expenditure and transportation effects (Ozcan, ¨ 2014). The expenditure effects occur from construction and operation of airports which generate employment and enhance purchasing capacity of the economy. The transportation effects arise from reduction in transportation costs due to decreased travel time, enhanced reliability and safety that will lead to decrease in production cost and stimulate investment in the economy (Taylor and Samples, 2002). The report of Air Transport Action Group (ATAG) shows that around 65.5 million jobs and 3.6 percent of global economic activity are supported by the aviation industry. Therefore, efficient civil aviation not only supports the economic development in a country but also provides an advantage during emergencies caused due to natural disasters, war, and famine.