An empirical study on the determinants of air trade – The case of South Korea and Chinese provinces

Abstract

The air transportation industry is becoming an increasingly important growth factor for economic development as trade and logistics exchanges between South Korea and China continue to grow. The main objective of this article is to examine the factors that influence air trade between South Korea and 31 Chinese provinces from 2010 to 2019, with the aim of promoting the expansion of air trade between the two countries. The findings suggest that, with the exception of South Korea’s exports to the 31 Chinese provinces, the gross regional domestic product has a significantly positive effect. The effects of distance and personal income on total air trade, air imports and exports are notably negative and positive respectively. Furthermore, foreign direct investment has a positive impact only when South Korea exports to China. The study concludes that, enhancing the volume of air traffic between South Korea and China can be accomplished by directing investments towards inland areas that possess trade-potential, expanding airport infrastructure, and developing regional economic growth. Furthermore, it is suggested that emerging domestic markets should be under close observation due to the changes in the trade structure after the COVID 19.