The role of airports in enhancing total factor productivity: Evidence from listed companies in China

China's civil aviation industry has undergone far-reaching and comprehensive reforms to modernize and build a thriving industry in the 21st century. Developing aviation helps stimulate regional economic growth and improves local business efficiency. This study examines the impacts of air transport development on total factor productivity of local companies and explores the mediating effects of enterprise innovation and investor attention. Firstly, this paper calculates air accessibility as a measure of air transport development and uses the Olley-Pakes (OP) method to calculate total factor productivity of companies. Secondly, this paper adopts the panel fixed effect model to examine the impacts of air transport on total factor productivity based on the data of listed companies in China from 2000 to 2019. Thirdly, this paper constructs a mediating model to explore the mechanisms by considering enterprise innovation and investor attention as mediator variables. In the end, this paper explores the possible adverse risks of local government debt and population loss associated with the high costs of airport infrastructure construction and operation.

This paper finds that: (1) Air transport development has greatly improved total factor productivity of companies and the impacts are differentiated by the heterogeneity of city sizes, ownership structures company types, industries, and distance to the nearest airport. (2) The positive influences of airport transport development for total factor productivity are mediated through the influence paths of enterprise innovation and investor attention. (3) Airport infrastructure investment are conductive to high local debt risks, but after the operation of new projects, the positive economic impacts start to mitigate the high local debt risks. (4) New airport infrastructure promotes population growth for both airport cities and cities without airports.

This study shows clear and consistent evidence that air transport contributes to total factor productivity. When selecting a location or developing business strategies, non-state-owned, labor-intensive, and technology-intensive companies should prioritize the advantages of air transportation to reduce transportation costs and enhance productivity.