Headlines 2016

Aviation is important to business!

2016-04-12


The link between air travel and economic activity is very strong, explained Shon Ferguson, IFN, and Richard Forslid, Stockholm University, in the SNS report "Flyget och företagen” (Aviation and business) which was presented on Tuesday. They show that a municipality with half as much distance to the airport has 50 percent higher production. The study also shows that knowledge-intensive industries (such as IT and finance) are most dependent on aviation.

Ferguson and Forslid have studied how a municipality's trade and foreign direct investment is affected by the number of flight departures direct to a country. They conclude that when the number of direct connections doubles, trade in services increases by 20%. At the seminar the researchers explained that they were surprised at the results showing that the IT industry is particularly sensitive to access to airports. One explanation for this, they said, is the presence of global supply chains.

They also looked at how companies around the country are affected by having direct flights to Stockholm. It turns out that direct flights to the capital is important for especially the manufacturing industry, which is the dominant industry in the municipalities outside the three metropolitan cities.

2016-04-12 Panel SNS.jpg
The panel at the seminar included in addition to the researchers: Mattias Goldman, think tank Fores, and Marika Rankka, Stockholm Chamber of Commerce.

 
“Aviation is particularly important for trade in services and the human capital-intensive service sector”, explained Richard Forslid, continuing:

“We used the Öresund bridge as a natural experiment to establish the causal effects of international direct routes and we find positive effects.”

At the seminar, the researchers pointed to two policy implications:

1. Well-functioning air transport is important for Sweden to continue developing as an export nation in the field of high tech and advanced services.

2. Subsidies to regional airports can be an effective regional policy. (Cost-benefit analysis must be made on a case by case basis).

Read the report

Listen to a podcast with Shon Ferguson on the report

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