The Impact of Air Cargo on Regional Economic Development: Evidence from Chinese Cities

Abstract

This study explored the impact of the air cargo industry on the regional economy by regressing panel data for 91 prefecture-level cities in China from 2006 to 2019. By using the total employment and the employment of the 19 sub-industries as indicators of regional economic development, results show that only the growth of employment in the manufacturing sector is significantly and positively associated with the growth of air cargo volume. This study then explores the heterogeneity of the impact of air cargo on manufacturing employment in different types of cities by using a dummy variable interaction term and finds that in terms of the elasticity of growth of air cargo on manufacturing employment, southwest, and northwest regions are significantly higher than other regions, inland cities are significantly higher than coastal port cities, and major gateway cities are significantly lower than non-major gateway cities. Our research shows that air cargo development can lead to manufacturing industry clustering, while air cargo infrastructure development is more important for the economic development of inland regions and secondary gateway cities.

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