Does Air Cargo Matter in Chinese Regional Economic Development? An Empirical Granger Causality Test

Using longitudinal data of 110 prefecture-level cities in China between 2006 and 2019, this paper conducts a Granger causality test between air cargo and regional economies through a multivariate VAR model, and attempts to explain the causal relationship in accordance with the endogenous and exogenous growth theory. Our results show that while the impacts of regional socioeconomic factors, including GDP and employment, on air cargo are larger in terms of magnitude than those of air cargo on the regional economy, the former effects are less robust when subsamples are included in the models. The benefits of air cargo growth for local economic growth are less dependent on the sizes, locations, and characteristics of cities. In accordance with the endogenous and exogenous growth theory, air cargo development policies need to be more favorable to regions with faster growth in secondary industry employment, as well as regions that are in urgent need of developing import and export trade.