Do Airports Affect Regional Economic Growth? Evidence From China

Abstract

This paper investigates the impacts of airports on regional economic growth using county-level data in China from 2000 to 2019. Firstly, this paper constructs the air accessibility index, which measures airport activities and improves the previous measurements by adding flight frequency as the weight. Secondly, to address the endogeneity problem in determining airport location, this paper uses the instrument variable and adopts the two-stage least squares method. This paper uses historical air accessibility estimated based on the airport network in 1957 as the instrumental variable. The paper finds the following. (1) Air accessibility positively affects economic growth in China, and the impacts are differentiated by regional heterogeneity and industrial heterogeneity. (2) The construction of new airports shortens the travel time by road transport to the airport, thus reducing the total travel time from origin to destination. The effects of airport construction are significant for local economic growth. (3) This paper takes a closer look at the spatial pattern of airport economic effects. In addition, the results show that local economic effects are differentiated by their distance from airports. This study shows clear and consistent evidence that airport construction positively affects regional economies, and it is beneficial for policy-makers in formulating policies to promote local economic growth.