Does new airport investment promote urban economic development?: Global evidence from nighttime light data

Abstract

This study aims to provide global evidence on the net impact of new airport investment on urban economic development by analyzing cities with/without new airport construction in a quasi-experimental design framework. A two-way fixed difference-in-differences (DID) method along with Mahalanobis distance matching (MDM) is applied to scrutinize the causal association of new airport investment with urban economic development. This empirical analysis assumes nighttime light intensity at a grid-cell scale of 15 arc-second as an economic indicator. We regress nighttime light intensity from 2015 to 2019 for 27 treatment cities with new airport construction from 2015 to 2017 and other control cities selected from 13,038 cities in the world. The estimation results indicate that new airport construction increases nighttime light intensity by (1) about 10.8 % in cities that had demonstrated relatively low nighttime light intensity and (2) about 9.5 % in cities that had introduced their first airports. This study presents empirical evidence on the positive economic impacts of new airport investment for relatively small cities in emerging economies, wherein economic statistics are insufficient or unavailable.