Friday, December 22, 2017

The impact of international long-distance flights on the spatial allocation of economic activity and inequality

Very interesting paper on the intersection of economic geography, development and transport economics. From a quick glance at the paper, I believe it could probably bring some interesting insights into network science as well.

Campante, F., & Yanagizawa-Drott, D. (n.d.). Long-Range Growth: Economic Development in the Global Network of Air Links. The Quarterly Journal of Economics. doi:10.1093/qje/qjx050

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.

ps. The authors are also on Twitter in case you would like to follow their work more closely. Campante, F., & Yanagizawa-Drott

credit: Campante & Yanagizawa-Drott, 2017

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