The causality between air transport and economic growth: Empirical evidence from regions in Asia

Abstract

This study examines the causality between air transport (passenger and cargo) and economic growth among regions in Asia. Using panel data from 1975 to 2019, the study applies econometric methods to test the stationarity and cointegration of the data, followed by the Granger causality test, and finally estimates the effect coefficients. The effect coefficients are estimated by the panel autoregressive distributed lag model (ARDL) and robustness tests by comparison with panel least squares (LS) methods. The study results confirm a bi-directional causality relationship in most regions of Asia. However, the study only confirms a unidirectional relationship from economic growth to air passenger transport in South Asia and from economic growth to air freight in Central Asia and West Asia. In addition, specific effect coefficients between air transport and economic growth in the long-run and short-run are also established in regions where they have a causal relationship. These findings serve as a basis for the development of air transport policy in different regions of Asia.