Liberalism in Foreign Trade versus Liberalism in Air Transportation - Is there a Link?

Abstract

The aim of this paper is to determine whether there is a statistically significant link between regulation of international civil aviation and protectionism against foreign trade. We use weighted air liberalization index (WALI) as a proxy for the level of regulation in a country’s foreign aviation relations; trade tariff restrictiveness index (TTRI) and overall trade restrictiveness index (OTRI) as proxies for the level of protectionism in a country’s foreign trade. Correlation analysis shows that there is no statistically significant link between the indicators. Hence, our research confirms the view that air transportation is a specific sector and it is subject to a different kind of policies than trade in goods. We also demonstrate that large high-income countries tend to have a more liberal approach to international civil aviation than small low-income countries.

Key words: Liberalism, Protectionism, Foreign trade, Air transportation.
JEL: F13, L93.