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

Md Mahbubul Hakim and Rico Merkert

Journal of Transport Geography, 2016, vol. 56, issue C, 120-127

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 42years (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 3–4years should guide aviation firms and policy makers in the preparation of necessary infrastructure required to support the strong air transport growth potential.

Keywords: Causality analysis; Air transport; Economic growth; Aviation infrastructure, South Asia (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (63)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jotrge:v:56:y:2016:i:c:p:120-127

DOI: 10.1016/j.jtrangeo.2016.09.006

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