The causal relationship between air transport and economic growth: Empirical evidence from South Asia

Md Mahbubul Hakim, Rico Merkert

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This paper examines the causal relationship between air transport and economic growth in the South Asian context. Using panel data over a period of 42 years (1973–2014), we apply Pedroni/Johansen cointegration test methods, followed by Granger long-run and Wald short-run causality tests. To allow for spatial heterogeneity we then apply Time Series Cross Section (TSCS) Granger causality tests for each of the eight analysed countries separately. Our results confirm a long-run uni-directional Granger causality which runs from GDP to air passenger traffic and also to air freight volumes. Contrary to the existing literature we do not find a long-run bi-directional causality which confirms that spatial dimensions and context matter (i.e. low income and large populations). The absence of short-run causality and the identified time lags of 3–4 years should guide aviation firms and policy makers in the preparation of necessary infrastructure required to support the strong air transport growth potential.

Original languageEnglish
Pages (from-to)120-127
Number of pages8
JournalJournal of Transport Geography
Volume56
DOIs
Publication statusPublished - 1 Oct 2016
Externally publishedYes

Keywords

  • Air transport
  • Aviation infrastructure, South Asia
  • Causality analysis
  • Economic growth

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