Liberalizing air cargo services in APEC

Massimo Geloso Grosso and Ben Shepherd

MPRA Paper from University Library of Munich, Germany

Abstract: This study aims at assessing the link between a more liberal air cargo regime and increased bilateral merchandise trade in the Asia Pacific region, under the auspices of APEC. Using the gravity model and employing the Air Liberalisation Index (ALI) developed by the WTO Secretariat, this paper finds strong support for two hypotheses. First, more liberal air services policies are positively, significantly and robustly associated with higher bilateral trade in merchandise. The results also show that air transport policy matters more for some sectors than for others. A particularly strong relationship is found between bilateral liberalisation and trade in manufactured goods, time sensitive products, and parts and components. Considering the sector found to be most sensitive to the degree of aviation liberalisation, the estimates imply that a one point increase in the ALI is associated with an increase of 4% in bilateral parts and components trade, prior to taking account of general equilibrium effects. These findings have important policy implications. In particular, economies actively seeking greater integration in international production networks could greatly benefit from a more liberal aviation policy regime.

Keywords: Aviation; international trade in services; liberalization; international trade in goods; parts and components trade; production networks; APEC. (search for similar items in EconPapers)
JEL-codes: F13 F15 L93 (search for similar items in EconPapers)
Date: 2009-10-07
New Economics Papers: this item is included in nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17781

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