Economic Effect and Disparity of Airport Economic Zones Utilizing the Synthetic Control Method

Abstract

This study investigates the economic impact of an airport economic zone (AEZ) on a city using the synthetic control method (SCM). It is an important issue for small-sized and medium-sized cities to make effective strategic plans for AEZs according to their own characteristics. Cities have begun to imitate the successful experiences of AEZs in cities with larger economies, but they often fail to replicate the same path. Moreover, the current methods are likely to reduce the reliability of the causality argument because of the lack of random sampling and random allocation of treatment. The SCM can solve this problem. In this research, the SCM was used to investigate panel data for 37 small- and medium-sized cities in China for the period 2000–2016. The results showed that the presence of an airport had a significant positive economic effect on cities with a higher economic strength and a weak positive effect on cities with a lower economic strength in our treatment group sample. In investigating the causal mechanism for this disparity, we found that the higher the match between the types of industries laid out in the AEZ and the city’s dominant industries, the better the economic development from a long-term development perspective. In addition, since AEZs are embedded in specific socio-economic contexts, it is sometimes difficult to apply successful experiences to AEZs in less developed cities. Our research utilized a new policy evaluation method and has significant implications for decision-makers.