GLOBALIZATION HAS BROUGHT PEOPLE, places and products closer together than ever before. Advanced communication, marketing and transportation networks have accelerated economic inter-connectedness, lifting the fortunes of many corporations, countries and citizens, although often in a disproportionate way.
Long-distance air travel is one key factor in this process. A new research paper co-authored by Harvard Kennedy School Associate Professor Filipe Campante finds that getting connected into the global network of air links can foster development, primarily by facilitating the face-to-face contact that fosters business links, but also finds that many places get left behind in the process.
In their study, Campante and his co-author David Yanagizawa-Drott from the University of Zurich examine the causal effect of air links upon local economic development using data from 819 cities with major airports. They exploit the fact that due to regulations that have been imposed on ultra-long-haul flights of more than 12 hours, cities that happen to be just under 6000 miles apart are much more likely to be connected than those just over 6000 miles apart.
“As long as pairs of cities just above 6000 miles apart are not systematically different from pairs just below, and as long as cities that happen to have lots of potential connections just under 6000 miles away are not systematically different from cities with lots of potential connections just over 6000 miles away, we can compare what happened to those cities and city pairs, over the last couple of decades, in order to tease out the causal impact of having more direct long-distance flights,” they write.
The authors found strong evidence to support the hypothesis that direct air links do indeed spur economic activity, in particular in places close to the affected airport.
“Connections induce further connections: if people can fly to Shanghai from Milan but not from Madrid (as was the case until this summer), then others will have more of an incentive to fly to Milan and not Madrid. This means that long-haul flights induce shorter-haul flights, and this translates into more people flying in and out of a city,” they write. “It turns out that this has a positive effect on business links. We find that places just under 6000 miles apart are much more likely to have such links, measured by firms in one city owning companies in the other. This in turn means that places close to lucky airports are more likely to invest and receive investment from abroad.”
That said, the authors also found that not everyone wins – cities that were very poor to begin with don’t gain more connections, even though they may be close enough to accommodate significant numbers of non-stop jets from other major cities.
“Our research helps show that claims regarding the ‘death of distance’ have been overstated: where you are, and how easy it is for you to get face-to-face contact with others, matters a lot. It also underscores the view that the impact of globalization on development and inequality is complex and nuanced: it may help some places take off, but leave others behind in the figurative runway.”