Air routes and direct foreign investment

Abstract

The study explores "Airline Routes and Foreign Direct Investments", reconstructing the problem and the main evidence developed in the text. The reasons behind this evidence are to be traced back to two fundamental aspects: the importance of face-to-face contacts and travel costs. At the same time the distribution of air routes is strongly asymmetrical and the regions best connected to the end of 2008 are: Lombardy, Lazio and, for tourist reasons, the two islands. Following the indications of recent studies (Lian and Rønnevik, 2011), it was decided to use the access time by land as an attribution mechanism. Considering the benefits that an area can achieve from IDE’s attraction to both large and SMEs, the results obtained suggest significant policy implications. Regional and local policies aimed at attracting foreign investors should at the same time promote the development of air infrastructure and in particular the development of new routes aimed at linking countries with greater strategic interest. The development of secondary airports could also be an objective to be pursued if it was deemed necessary to decongest historically more attractive areas.

Keywords

direct foreign investment; infrastructure; internationalization; Italy; small and mediumsized enterprises; territorial disparities

JEL codes

F23; F21; R11