Examining the impact of air cargo growth on poor Vietnamese rural and urban households

Abstract

This study adopts a Structural Path Analysis to explore the ways in which air cargo can play a role in reducing poverty in Vietnam. This study departs from the prevalent and extensively researched macroeconomic analysis of air cargo, focusing instead on the microeconomic and distributional effects. The results show that air cargo growth stimulates the production of the sectors that employ semi-skilled and unskilled rural workers. The results indicate that the effect of air cargo expansion on poverty is more pronounced in rural households than in urban households. The conclusion drawn from this study is that policies focused on decreasing transaction costs and enhancing human capital have the potential to amplify the effects of air cargo on poverty. Moreover, expanding air cargo and simultaneously improving human capital in Vietnam would provide the catalyst for upgrading from value-added assembling functions to higher value-added roles in global value chains.