Global and Local Networks: The Positioning of Asian Cities

• Theme 2: Global and Local Networks: The Positioning of Asian Cities
  • Sub-Theme 2: Global Air Network and Location Choices of MNCs (Multi-National Corporations)

How does the global air network facilitate cross-border venture capital movements?

• Based on the difference-in-differences estimate, one additional flight per day leads to an increase in VC investment between the city pair by 0.14 deals on average per year (1.08 times the mean value).
• The heterogeneous analysis indicates that, with more air connections, emerging industries and firms in earlier developmental stages receive more investment, and non-syndication investment increases more than syndication investment.
• The effect significantly increases with geographical distance: city pairs that are far away from each other experience a larger increase in VC flow after flight connections exist.
• Most of this increase in capital flows happen in wealthier cities. Connections between poor cities show little effect on VC flow. 
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CASE STUDY: How Singapore’s connectivity in the air traffic network support national economic development? Findings show flight connectivity significantly impacts headquarter-subsidiary(/branch) location choice. The effect is strongest for companies in high-skilled, highly tradable service industries.

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