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Long-Range Growth: Economic Development in the Global Network of Air Links

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  • Filipe Campante
  • David Drott

Abstract

This paper studies the impact of international long-distance flights on the global spatial allocation of economic activity. To identify causal effects, it exploits variation due to regulatory and technological constraints that give rise to a discontinuity in connectedness between cities at a distance of 6000 miles. This shows that these air links have a positive effect on local economic activity, as captured by satellite-measured night-lights. To shed light on how air links shape economic outcomes, this paper first presents evidence of positive externalities in the global network of air links: connections induce further connections. It then finds that air links increase business links, showing that the movement of people fosters the movement of capital. In particular, this is driven mostly by capital flowing from high-income to middle-income (but not low-income) countries. Taken together, the results suggest that increasing interconnectedness generates economic activity at the local level by inducing links between businesses, but also gives rise to increased spatial inequality locally, and potentially globally. [Working Paper 22653]

Suggested Citation

  • Filipe Campante & David Drott, 2016. "Long-Range Growth: Economic Development in the Global Network of Air Links," Working Papers id:11346, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:11346
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    More about this item

    Keywords

    international long-distance flights; global spatial allocation; economic activity; regulatory and technological constraints; satellite-measured night-lights; global network of air links; spatial inequality;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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