Master's Degree Thesis
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Master’s degree thesis LOG950 Logistics Investigating air transports effect on regional economic development, in a Norwegian context. André Ree Number of pages including this page: 148 Molde, 23.05.2016 Mandatory statement Each student is responsible for complying with rules and regulations that relate to examinations and to academic work in general. The purpose of the mandatory statement is to make students aware of their responsibility and the consequences of cheating. Failure to complete the statement does not excuse students from their responsibility. Please complete the mandatory statement by placing a mark in each box for statements 1-6 below. 1. I/we hereby declare that my/our paper/assignment is my/our own work, and that I/we have not used other sources or received other help than mentioned in the paper/assignment. 2. I/we hereby declare that this paper Mark each 1. Has not been used in any other exam at another box: department/university/university college 1. 2. Is not referring to the work of others without acknowledgement 2. 3. Is not referring to my/our previous work without acknowledgement 3. 4. Has acknowledged all sources of literature in the text and in the list of references 4. 5. Is not a copy, duplicate or transcript of other work 5. I am/we are aware that any breach of the above will be considered as cheating, and may result in annulment of the 3. examination and exclusion from all universities and university colleges in Norway for up to one year, according to the Act relating to Norwegian Universities and University Colleges, section 4-7 and 4-8 and Examination regulations section 14 and 15. 4. I am/we are aware that all papers/assignments may be checked for plagiarism by a software assisted plagiarism check 5. I am/we are aware that Molde University College will handle all cases of suspected cheating according to prevailing guidelines. 6. I/we are aware of the University College’s rules and regulation for using sources Publication agreement ECTS credits: 30 Supervisor: Prof. Svein Bråthen, Molde University College Agreement on electronic publication of master thesis Author(s) have copyright to the thesis, including the exclusive right to publish the document (The Copyright Act §2). All theses fulfilling the requirements will be registered and published in Brage HiM, with the approval of the author(s). Theses with a confidentiality agreement will not be published. I/we hereby give Molde University College the right to, free of charge, make the thesis available for electronic publication: yes no Is there an agreement of confidentiality? yes no (A supplementary confidentiality agreement must be filled in) - If yes: Can the thesis be online published when the period of confidentiality is expired? yes no Date: 23.05.2016 Preface This thesis is written as a final and mandatory part of the Master of Science in Logistics program at Molde University College. The thesis is written in the period January-May 2016, and has been conducted under the supervision of Professor Svein Bråthen from Molde University College. I would like to express my gratitude to Professor Svein Bråthen for all the help he has provided during the development phase of the thesis, as well as his help with the formation of the questionnaires. I have greatly appreciated the Professors constructive feedback throughout the writing phase, as well as his willingness to provide me with the resources I needed. In addition, I would like to thank the firms who took their time to answer my questionnaire, and express my deepest Gratitude to Sogn Regionråd, Luster Sparebank, Molde Næringsforum and Ålesund Næringsforening, for their willingness to distribute the survey. At last, I owe thanks to my wife Åse, who have tried her best not to be effected by my long days of studying and my general lack of mental presence these last six months. Molde, May 2016. André Ree Abstract The purpose of this thesis is to study the effects air transport have on regional economic development, in a Norwegian context. The thesis consist of three analyzes, all with the intent to determine if, how and why these effects occur, and what relevance they have for economic development in rural and remote locations. The thesis shows that there is a relationship between air transport and economic development, in addition there are indications that air transport will effect different sized economies in different manners. Furthermore, there are indications that these effects would occur in the long and/or short run for a set of Norwegian airports. In addition, the thesis quantifies the employment effect generated from air transport, these results indicate that with a 10 percent increase in passenger volumes, one could assume that employment would increase by 0,9 and 1,2 percent. Similar results are shown in service sector employment. These types of econometric analyzes have to this authors knowledge not been conducted in a Norwegian context before, and the results should be of great interest for the stakeholders and legislators invested in Norwegian air transport. The effects shown in this thesis indicate that the supply of air transport in a region will generate employment effects and increased productivity. For a region the increased accessibility air transport creates, serve as a tool to attract qualified people to the local industry, and further develop this industry thru knowledge sharing facilitated by the presence of air transport. In addition, the results of the thesis serve as a confirmation, that the government’s goals of ensuring activity in the peripheral is met. In addition to the economic effects generated at the aggregated level, the thesis presents results of a survey conducted in the Sogndal region. This survey does not represent the population in a sufficient manner, and is therefore not applicable to determine how air transport effects the Sogndal region. However, the survey provides results which indicate that the airport facilitates increased collaboration, and that it has an importance for the firms market activities. v Contents PART I .................................................................................................................................. 1 1.0 Introduction ................................................................................................................ 1 1.1 Research problem and research questions .............................................................. 1 1.2 Limitations of the study .......................................................................................... 4 1.3 Thesis structure ....................................................................................................... 4 2.0 Theory and literature review ...................................................................................... 6 2.1 New economic geography ...................................................................................... 6 2.1.1 Transportation and regional development ....................................................... 8 2.1.2 The vertical linkages of firms ....................................................................... 12 2.1.3 Spatial economics in a Norwegian context ................................................... 15 2.2 Air transport in Norway ....................................................................................... 19 2.2.1 Aviation in Norway ....................................................................................... 20 2.2.2 Airports catchment area ................................................................................ 23 2.2.3 Air transport and other infrastructure ............................................................ 27 2.3 Economic impacts of Air Transport ..................................................................... 28 2.3.1 Direct effects ................................................................................................. 29 2.3.2 Indirect and Induced effects .......................................................................... 30 2.3.3 Catalytic effects ............................................................................................. 30 2.4 Literature review .................................................................................................. 33 2.4.1 The casual relationship between air transport and economic growth ........... 33 2.4.2 Air transports effect on regional development .............................................. 35 3.0 Methodology ............................................................................................................ 39 3.1 Research design .................................................................................................... 40 3.2 Case study ............................................................................................................. 41 3.3 Granger causality tests .......................................................................................... 42 3.3.1 The concept of Granger causality ................................................................. 42 3.3.2 Testing for heterogeneous causality .............................................................. 43 3.3.3 Vector error correction method ..................................................................... 47 3.3.4 Data collection .............................................................................................. 49 3.4 2SLS Regression model specifications ................................................................ 49 3.4.1 Data collection