The nexus between air cargo and international trade: Empirical evidence from country groups

Abstract

Air cargo transportation is one of the most important transportation modes when the value of goods is taken into consideration. However, the relationship between air cargo transportation and international trade has been neglected. This study contributes to the literature by focusing on the relationship between these variables in a large country sample group. The aim of this study is to examine the multidimensional relationship between air freight transportation and international trade. In the study, international trade (ME) and air cargo (AC) data for 127 countries are analysed for the period 2000–2021. In the study, cointegration tests and short and long run causality tests were used to identify the relationship between variables. Pedroni cointegration test results indicate that AC may have an impact on ME in the long run. In addition, according to the results of the study, the effect of ME on AC is significant in the short run. Dumitrescu and Hurlin (2012) panel Granger causality test results find evidence of homogeneous bidirectional causality from AC to ME and from ME to AC. In country-by-country analyses, there is causality from ME to AC in 7 countries from Africa, 7 from Asia, 2 from Europe, 2 from Europe, 9 from the Americas and 2 from the Middle East. Causality towards ME was statistically detected in 9 countries from Africa, 8 from Asia, 10 from Europe, 3 from America and 2 from the Middle East. Bidirectional causality is found in 3 countries from Africa, 2 from Asia, 2 from Europe, 2 from Europe, 3 from America and 1 from the Middle East.