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Long-range growth: economic development in the global network of air links


Campante, Filipe; Yanagizawa-Drott, David (2018). Long-range growth: economic development in the global network of air links. Quarterly Journal of Economics, 133(3):1395-1458.

Abstract

We study the impact of international long-distance flights on the global spatial allocation of economic activity. To identify causal effects, we exploit variation due to regulatory and technological constraints which give rise to a discontinuity in connectedness between cities at a distance of 6,000 miles. We show that improving an airport’s position in the network of air links has a positive effect on local economic activity, as captured by satellite-measured night lights. We find 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, our results suggest that increasing interconnectedness induces links between businesses and generates economic activity at the local level, but also gives rise to increased spatial inequality locally, and potentially globally.

Abstract

We study the impact of international long-distance flights on the global spatial allocation of economic activity. To identify causal effects, we exploit variation due to regulatory and technological constraints which give rise to a discontinuity in connectedness between cities at a distance of 6,000 miles. We show that improving an airport’s position in the network of air links has a positive effect on local economic activity, as captured by satellite-measured night lights. We find 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, our results suggest that increasing interconnectedness induces links between businesses and generates economic activity at the local level, but also gives rise to increased spatial inequality locally, and potentially globally.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Economics and Econometrics
Language:English
Date:2018
Deposited On:09 Feb 2018 08:36
Last Modified:20 Sep 2018 04:28
Publisher:Oxford University Press
ISSN:0033-5533
OA Status:Closed
Publisher DOI:https://doi.org/10.1093/qje/qjx050

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Embargo till: 2019-12-20