1. Impact of air connectivity on bilateral service export and import trade: The case of China.
- Author
-
Oum, Tae Hoon, Wu, Xiangru, and Wang, Kun
- Subjects
- *
BALANCE of trade , *TRAFFIC density , *AIRWAYS (Aeronautics) , *INTERNATIONAL trade , *BILATERAL trade - Abstract
This paper examines the effect of bilateral air connectivity on bilateral service trade flows. Our service trade data includes 'commercial', 'transport', 'travel', and 'government' services. We developed a reduced-form gravity-type model using the Chinese data. An instrument variable (IV) approach is adopted to address the endogeneity issue between bilateral air connectivity and the service trade variables. Our key results are: (a) increasing the number of direct routes can significantly promote bilateral service export and import trades; (b) the average route-level traffic density has only marginal positive effects; (c) improving air connectivity would enlarge China's overall service trade deficit, because the transport and travel services imports are promoted more than their exports; (d) The 'commercial' service exports can be stimulated more than the imports, making China achieve larger commercial service trade surplus by improving bilateral air connectivity. •Increasing the number of direct air routes significantly promotes bilateral service trades in China. •Improving air connectivity enlarges China's overall service trade deficit. •Enhancing bilateral air connectivity stimulates China's commercial service exports more than imports. •China's growing international air transport, facilitated by the Belt-and-Road Initiative, has had a substantial impact on bilateral service trade. [ABSTRACT FROM AUTHOR]
- Published
- 2024
- Full Text
- View/download PDF