IDEAS home Printed from https://ideas.repec.org/p/cid/wpfacu/127a.html
   My bibliography  Save this paper

Air Transportation and Regional Economic Development: A Case Study for the New Airport in South Albania

Author

Listed:
  • Shreyas Gadgin Matha
  • Patricio Goldstein

    (Center for International Development at Harvard University)

  • Jessie Lu

Abstract

Considering the case of the proposed airport in Vlora, South Albania, this report analyzes the channels through which a new greenfield airport can contribute to regional economic development. In December 2019, the Government of Albania opened a call for offers to build a new airport in the south of the country. While there is evidence indicating that the airport could be commercially viable, this does not provide a grounded perspective on the channels by which the airport could boost the regional economy. To evaluate how the new airport would interact with existing and potential economic activities, this report evaluates three of the most important channels of impact by which the airport could serve as a promoter: (1) economic activities directly related to or promoted by airports, (2) the airport’s potential contribution to the region’s booming tourism sector and (3) the potential for the country’s development of air freight as a tool for export promotion. In each of these three cases, the report identifies complementary public goods or policies that could maximize the airport’s impact in the region. The operation of the airport itself could stimulate a series of economic activities directly related to air traffic services. Airports have the ability to mold the economic structure of the places immediately around them, acting both as a consumer and as a supplier of air transport services. Not only activities related to transportation and logistics thrive around airports, but also a variety of manufacturing, trade and construction industries. Nevertheless, the agglomeration benefits of a successful aerotropolis are not guaranteed by the construction of an airport. For South Albania’s new airport to actualize its potential returns, integrated planning of the airport site will be required, with focus on real estate planification and provision of complementary infrastructure. Establishing an airport in Vlora has the potential to spur regional development in South Albania through facilitating the growth of the tourism sector and its related activities. Albania’s tourism industry has seen strong growth in the last two decades, but still lags behind its potential. Albania only has a strong penetration in the tourism market of its neighboring markets, and the high seasonality of the tourism season further limits the sector’s growth. The establishment of an airport in South Albania would ease some of the tourism industry constraints tied to transportation into the country and region. Given the high reliance of the tourism industry on its many complementary inputs, more than one area of concern may have to be addressed for the impact of the new airport to be maximized. Facilitating transportation access around the South Albania region and specifically to tourist sites; preparing natural and cultural heritage sites for tourism use and expanding tourism infrastructure to accommodate potential growth are some of the interventions analyzed. Airfreight infrastructure could in theory provide opportunities to improve the competitiveness of Albanian exports but developing a successful air cargo cluster is no simple task. An airport can facilitate an alternative mode of transport for specific types of goods and hence promote a country’s exports. In Albania’s case, not only existing textile and agriculture products could be competitively exported through air freight, but also air freight itself could improve Albania’s position to diversify into “nearby” industries, identified by the theory of Economic Complexity. Nevertheless, an effective air freight strategy does not and cannot uniquely depend on the simple availability of a nearby airport. Air cargo operations require both traffic volume that Albania may not be able to provide, as well as complementary cargo-specific infrastructure. Although the potential for air freight in South Albania could be high, it is by no means a safe bet nor does it imply with certainty significant impact in the immediate future.

Suggested Citation

  • Shreyas Gadgin Matha & Patricio Goldstein & Jessie Lu, 2020. "Air Transportation and Regional Economic Development: A Case Study for the New Airport in South Albania," CID Working Papers 127a, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:127a
    as

    Download full text from publisher

    File URL: https://growthlab.cid.harvard.edu/files/growthlab/files/2020-06-cid-fellows-wp-127-albania-air-transport.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jan K. Brueckner, 2003. "Airline Traffic and Urban Economic Development," Urban Studies, Urban Studies Journal Limited, vol. 40(8), pages 1455-1469, July.
    2. Marco Percoco, 2010. "Airport Activity and Local Development: Evidence from Italy," Urban Studies, Urban Studies Journal Limited, vol. 47(11), pages 2427-2443, October.
    3. Andrés Rodríguez-Clare, 2005. "Coordination Failures, Clusters, and Microeconomic Interventions," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2005), pages 1-41, March.
    4. Gebreeyesus Mulu & Iizuka Michiko, 2012. "Discovery of Flower Industry in Ethiopia: Experimentation and Coordination," Journal of Globalization and Development, De Gruyter, vol. 2(2), pages 1-27, January.
    5. Dimitrios J. Dimitriou, 2018. "Comparative evaluation of airports productivity towards tourism development," Cogent Business & Management, Taylor & Francis Journals, vol. 5(1), pages 1464378-146, January.
    6. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    7. Julie Cidell, 2015. "The role of major infrastructure in subregional economic development: an empirical study of airports and cities," Journal of Economic Geography, Oxford University Press, vol. 15(6), pages 1125-1144.
    8. Sheard, Nicholas, 2014. "Airports and urban sectoral employment," Journal of Urban Economics, Elsevier, vol. 80(C), pages 133-152.
    9. Marquise J. McGraw, 2017. "The Heterogeneous Impact of Airports on Population and Employment Growth in Cities☆," Advances in Airline Economics, in: The Economics of Airport Operations, volume 6, pages 261-312, Emerald Group Publishing Limited.
    10. Morley, Clive & Rosselló, Jaume & Santana-Gallego, Maria, 2014. "Gravity models for tourism demand: theory and use," Annals of Tourism Research, Elsevier, vol. 48(C), pages 1-10.
    11. Stephen J. Appold & John D. Kasarda, 2013. "The Airport City Phenomenon: Evidence from Large US Airports," Urban Studies, Urban Studies Journal Limited, vol. 50(6), pages 1239-1259, May.
    12. Sheard, Nicholas, 2014. "Airports and urban sectoral employment," Journal of Urban Economics, Elsevier, vol. 80(C), pages 133-152.
    13. Hausmann, Ricardo & Hidalgo, Cesar, 2014. "The Atlas of Economic Complexity: Mapping Paths to Prosperity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262525429, December.
    14. Ricardo Hausmann & Bailey Klinger & Rodrigo Wagner, 2008. "Doing Growth Diagnostics in Practice: A 'Mindbook'," CID Working Papers 177, Center for International Development at Harvard University.
    15. Jacco Hakfoort & Tom Poot & Piet Rietveld, 2001. "The Regional Economic Impact of an Airport: The Case of Amsterdam Schiphol Airport," Regional Studies, Taylor & Francis Journals, vol. 35(7), pages 595-604.
    16. Kirsi Mukkala & Hannu Tervo, 2013. "Air Transportation and Regional Growth: Which Way Does the Causality Run?," Environment and Planning A, , vol. 45(6), pages 1508-1520, June.
    17. Francesco David & Giuseppe Saporito, 2017. "The impact of a new airport on international tourism: the case of Ragusa (Sicily)," Questioni di Economia e Finanza (Occasional Papers) 412, Bank of Italy, Economic Research and International Relations Area.
    18. Redondi, Renato & Malighetti, Paolo & Paleari, Stefano, 2013. "European connectivity: the role played by small airports," Journal of Transport Geography, Elsevier, vol. 29(C), pages 86-94.
    19. Charles Kunaka & Robin Carruthers, 2014. "Trade and Transport Corridor Management Toolkit," World Bank Publications - Books, The World Bank Group, number 18241, December.
    20. Shelley M. Kimelberg & Elizabeth Williams, 2013. "Evaluating the Importance of Business Location Factors: The Influence of Facility Type," Growth and Change, Wiley Blackwell, vol. 44(1), pages 92-117, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jun Zhou & Liang Leng & Quan Yuan & Xiaofa Shi, 2022. "Does Air Cargo Matter in Chinese Regional Economic Development? An Empirical Granger Causality Test," Sustainability, MDPI, vol. 14(15), pages 1-22, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luisa Doerr & Florian Dorn & Stefanie Gaebler & Niklas Potrafke, 2020. "How new airport infrastructure promotes tourism: evidence from a synthetic control approach in German regions," Regional Studies, Taylor & Francis Journals, vol. 54(10), pages 1402-1412, October.
    2. Murakami, Jin & Matsui, Yurika & Kato, Hironori, 2016. "Airport rail links and economic productivity: Evidence from 82 cities with the world’s 100 busiest airports," Transport Policy, Elsevier, vol. 52(C), pages 89-99.
    3. Xiaowen Fu & Kan Wai Hong Tsui & Breno Sampaio & David Tan, 2021. "Do airport activities affect regional economies? Regional analysis of New Zealand’s airport system," Regional Studies, Taylor & Francis Journals, vol. 55(4), pages 707-722, April.
    4. Pot, Felix Johan & Koster, Sierdjan, 2022. "Small airports: Runways to regional economic growth?," Journal of Transport Geography, Elsevier, vol. 98(C).
    5. Lenaerts, Bert & Allroggen, Florian & Malina, Robert, 2021. "The economic impact of aviation: A review on the role of market access," Journal of Air Transport Management, Elsevier, vol. 91(C).
    6. Aguirre, Julio & Mateu, Pedro & Pantoja, Chrissie, 2019. "Granting airport concessions for regional development: Evidence from Peru," Transport Policy, Elsevier, vol. 74(C), pages 138-152.
    7. Jun Zhou & Liang Leng & Xiaofa Shi, 2022. "The Impact of Air Cargo on Regional Economic Development: Evidence from Chinese Cities," Sustainability, MDPI, vol. 14(16), pages 1-16, August.
    8. Pi, Jianhua & Li, Dong & Liu, Xingjian & Freestone, Robert, 2021. "The spatial distribution of employment around major Chinese airports," Journal of Transport Geography, Elsevier, vol. 91(C).
    9. Francesco Russo & Giuseppe Fortugno & Marco Merante & Domenica Savia Pellicanò & Maria Rosaria Trecozzi, 2021. "Updating National Air Passenger Demand from Traffic Counts: The Case of a Secondary Airport in an Underdeveloped Region," Sustainability, MDPI, vol. 13(15), pages 1-16, July.
    10. Talebian, Ahmadreza & Zou, Bo & Hansen, Mark, 2018. "Assessing the impacts of state-supported rail services on local population and employment: A California case study," Transport Policy, Elsevier, vol. 63(C), pages 108-121.
    11. Chen, Xin & Xuan, Chao & Qiu, Rui, 2021. "Understanding spatial spillover effects of airports on economic development: New evidence from China’s hub airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 143(C), pages 48-60.
    12. Wai Hong Kan Tsui & David Tat Wei Tan & Song Shi, 2017. "Impacts of airport traffic volumes on house prices of New Zealand’s major regions: A panel data approach," Urban Studies, Urban Studies Journal Limited, vol. 54(12), pages 2800-2817, September.
    13. Laila AitBihiOuali & Jose M. Carbo & Daniel J. Graham, 2020. "Do changes in air transportation affect productivity? A cross‐country panel approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(3), pages 493-505, June.
    14. Wu, Hanjun & Hong Tsui, Kan Wai & Ngo, Thanh & Lin, Yi-Hsin, 2023. "Airport subsidies impact on wellbeing of smaller regions: A systemic examination in New Zealand," Transport Policy, Elsevier, vol. 130(C), pages 26-36.
    15. Stephen Gibbons & Wenjie Wu, 2020. "Airports, access and local economic performance: evidence from China [Are Chinese cities too small?]," Journal of Economic Geography, Oxford University Press, vol. 20(4), pages 903-937.
    16. Fageda, Xavier & Jiménez, Juan Luis & Valido, Jorge, 2017. "An empirical evaluation of the effects of European public policies on island airfares," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 288-299.
    17. Bernardo, Valeria & Fageda, Xavier, 2019. "Globalization, long-haul flights and inter-city connections," Economics of Transportation, Elsevier, vol. 19(C), pages 1-1.
    18. Nicholas Sheard, 2021. "The network of US airports and its effects on employment," Journal of Regional Science, Wiley Blackwell, vol. 61(3), pages 623-648, June.
    19. Alderighi, Marco & Gaggero, Alberto A., 2017. "Fly and trade: Evidence from the Italian manufacturing industry," Economics of Transportation, Elsevier, vol. 9(C), pages 51-60.
    20. Kamruzzaman, Md. & Aston, Laura & Baker, Douglas & Braun, Boris & Shatu, Farjana, 2021. "Changes in land use typology of global airports: An empirical investigation with implications for the aerotropolis concept," Journal of Transport Geography, Elsevier, vol. 97(C).

    More about this item

    Keywords

    Economic Complexity; Tourism; Structural Transformation;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cid:wpfacu:127a. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chuck McKenney (email available below). General contact details of provider: https://edirc.repec.org/data/ciharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.