Spatial effects of air transport on regional development : Evidence from Turkey

Abstract

The rapid rise of aviation (including airport infrastructure) has prompted various research and policy questions on its socio-economic impact on spatial development of regions. Since the aviation industry facilitates a worldwide transportation network for business and tourism, it is considered to be a critical factor for economic growth. This study aims to analyze the relationship between air transport and regional development in Turkey, by using air passenger volume and regional employment data by means of both non-spatial and spatial regression methods. We run a Two-Stage Least Squares (2SLS) regression model with instruments to capture endogeneity, and Generalized Spatial Two-Stage Least Squares (GS2SLS) models to control for the spatial context by using data from 81 Turkish NUTS 3 regions (provinces) between 2008 and 2017. We extend the existing literature by measuring spatial spillover effects of air transport on regional growth. To the best of the authors' knowledge, this study is the first attempt to examine this link by considering both spatial effects and endogeneity problems. The results confirm our hypothesis that air transportation is an important determinant of regional employment in Turkish regions while the impact of air transport on regional employment decreases when spatial effects are taken into consideration.