Effect of aviation industry on economic performance

The aviation industry is one of the most important building blocks of our age and future. At the same time, it strives to continuously improve the economic growth and economic performance criteria of countries. In this research, the relationship between the aviation industry and economic performance criteria is investigated. In the study, G-7 economies as the observation group and 1997-2020 as the period were examined. Two different models were created in the empirical analysis using PVAR econometric methodology and Granger causality estimation. Model 1 consists of per capita income, trade and unemployment variables as the first group of economic performance criteria. Model 2 was formed as the second group of economic performance criteria. Exchange rate, foreign direct investment and balance of payments are used in Model 2. In both models, air transport is the dependent variable and CO2 is the control variable. According to the coefficient and causality estimates for Model 1; A two-way and statistically significant positive relationship was determined between the aviation sector and growth. On the other hand, a positive relationship was determined between the aviation sector, trade and CO2, and a negative relationship with unemployment. According to Model 2 estimations, exchange rate affects the aviation industry negatively. However, the aviation sector has a positive and statistically significant effect on foreign direct investments and the balance of payments. At the same time, the aviation industry has a positive impact on CO2 emissions. According to the empirical results, the aviation sector has an improving effect on the economic performance criteria in the G-7 economies and is among the dynamics of growth. For this reason, it is very important to increase the investments made in the aviation sector in the observation countries and to determine it as a priority area.