Governing the regional low-altitude economy: State-led development in emerging transport systems

Emerging air-based transport systems are increasingly promoted as new drivers of mobility, logistics, and regional development, yet their governance remains insufficiently understood. This study examines the governance of China's low-altitude economy (LAE) through an in-depth qualitative analysis of the Yangtze River Delta (YRD), a leading pilot region for low-altitude industry and urban air mobility development. Drawing on 52 policy documents and 147 semi-structured interviews, the paper analyses how inter-organisational relations, infrastructure conditions, market dynamics, and state-market coordination interact in shaping this emerging transport domain. The findings reveal a recursive governance configuration in which fragmented authority, infrastructural incompleteness, and policy-conditioned market behaviour mutually reinforce one another. State-led experimentation stabilises development and enables rapid resource mobilisation, while also constraining regional scaling through continued reliance on pilot-based authorisation and administrative coordination. These dynamics suggest that the core challenges of LAE development are institutional rather than technological and are not fully captured by existing transport governance and market-led innovation ecosystem models. The study contributes by refining innovation ecosystem theory through the concept of a state-dependent ecosystem, and advances debates on the regional governance of emerging transport systems by illustrating how experimentation, regulation, and market formation co-evolve under conditions of uncertainty and safety sensitivity.