New Airports Fuel Economic Growth in Developing Cities, Global Study Finds

A new study has revealed that constructing airports in less-developed cities can significantly boost their economic growth. The research, led by Assistant Professor Jin Murakami of the Singapore University of Technology and Design (SUTD) in collaboration with researchers in Japan, offers valuable insights for policymakers and investors considering airport development projects in emerging economies.

The study, titled “Does new airport investment promote urban economic development?: Global evidence from nighttime light data,” uses an innovative approach to measure economic development by analyzing nighttime light intensity (NTL) data from satellites. By comparing cities with and without new airport construction across the world, the researchers were able to isolate the “net” economic impact of airport development.

First Airports Bring Biggest Benefits to Developing Cities

The findings suggest that less-developed cities without existing airports stand to gain the most from constructing their first airport. The increased accessibility to the global aviation network brings about broader economic benefits and opportunities to these communities, promoting inclusive growth and connectivity for people living in remote locations.

“This study stresses the importance of incorporating the wider economic benefits to be attained in relatively small and/or geographically remote cities, towns, and communities in airport capital investment evaluation practices for regional network connectivity and inclusive economic growth, particularly in Asia and the Middle East,” emphasizes Asst Prof Murakami.

The researchers suggest that new airports go beyond expanding capacity to meet air transport demand—they serve as catalysts for economic development, creating jobs, attracting investments, and stimulating various sectors of the local economy.

Overcoming Challenges in Measuring Economic Impact

Modelling the relationship between airport development and economic growth proved to be a complex task due to the two-way causal relationships between transport infrastructure investment and urban economic growth. “It is also likely that rapid urban economic growth calls for new airport construction projects,” explains Asst Prof Murakami.

To address this challenge, the researchers applied a difference-in-differences (DID) method, comparing changes in NTL over the years between similar cities that differ only by local airport construction. They meticulously analyzed more than 13,000 cities worldwide to identify suitable control groups for comparison, systematically matching each case study.

The use of NTL data as a proxy for economic development allowed the researchers to examine cities with and without new airport construction across the world at finer spatial resolution and more regular time intervals, overcoming the limitations of inconsistent or unavailable GDP and employment data in smaller cities.

The comprehensive analysis of recent airport construction projects provides new generalisable global evidence that can help small towns and cities make crucial decisions where regional accessibility is a concern. Asst Prof Murakami hopes the findings will encourage global investors, policymakers, and financial institutions to reassess the bankability or economic feasibility of airport development projects in emerging economies based on current environmental, social, and governance (ESG) investing criteria.

The work was partially supported by the Asian Development Bank (ADB) and the Singapore University of Technology and Design Growth Plan (SGP)–Aviation.

As cities in emerging economies continue to grow and develop, the insights from this study will play a vital role in guiding airport investment decisions, ensuring that these projects not only meet the demands of air transport but also contribute to inclusive economic growth and regional connectivity.

Keyword: airport economic impact

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