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May 28, 2013

Positive economic impacts of an international airport: A comparative analysis ©

Tue May 28, 2013

by Kenrick Chambers

Let’s face it, the metamorphosis of globalization is upon us. People, companies, and nations are integrating and interacting more. The movement of services and goods globally requires logistical infrastructure that would accommodate the rapid pace of an integrated world. Hence, an international airport is a major apparatus of a nation’s infrastructure to generate economic activities such as international trade and tourism. International airports offer increased accessibility, which in turn fuels the tourism sector. With an increase in the number of visitors and airport users, more money flows into the local economy.{{more}}

St Vincent and the Grenadines is a member of the Organisation of Eastern Caribbean States (OECS). The OECS is a nine member grouping, comprising Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines, Anguilla and the British Virgin Islands (BVI is an associate member of the OECS). Except for the British Virgin Islands, the other eight members of the OECS use the same currency (Eastern Caribbean Dollar), have similar culture and geographical resemblances. Therefore, the islands are ideal for a comparative measurement of Gross Domestic Product (GDP) – those with international airport – and those without international airport. GDP is the market value of all final goods and services produced within a country in a given period of time; so, it is an important measurement of a country’s productivity.
 
To state it differently, in a simple manner, it is the health of a nation’s economy – the greater the number, the healthier the economy, ruling out inflation. So, let me demonstrate the importance of an international airport, in relationship to GDP, using 2012 GDP, measured in current prices in U.S. dollars. OECS members with international airports all have larger economies, respectively. OECS members with international airports are: (Antigua and Barbuda: GDP US$1.2B, Grenada: GDP US$0.881B, St Lucia: GDP US$1.3B, and St Kitts and Nevis: GDP US$0.771B). OECS members without international airports are: Anguilla, Dominica: GDP US$0.517, Montserrat, and St Vincent and the Grenadines: GDP US$0.741B.

Countries that possess an international airport have greater economies (measured by GDP). Although there are geographical and population variations, however, the constant variable that categorizes their economy, as measured by GDP, respectively, is the type of airport they possess – those with international (airports that can accommodate intercontinental flight) – and those without international airports.

You may have notice, St Kitts and Nevis’ GDP is only slightly higher than St Vincent and the Grenadines’. We must consider, however, St Kitts and Nevis has a population of only 57,000, compared to St Vincent and the Grenadines’ population of 110,000, almost twice the population of St Kitts and Nevis (as of 2012). Additionally, St Kitts and Nevis has a total area of 261 sq. km (St Kitts 168 sq. km; Nevis 93 sq. km), whereas St Vincent and the Grenadines’ total area equals 389 sq. km, which is comparatively larger than St Kitts and Nevis.
 
There are no significant economic advantages between the two nations – except an international airport. They both have assets of sun, sea, sand, fertile soil, similar culture, industries, and a geographical separation of only 316.68 miles – yet, St Kitts and Nevis, although smaller in size and population, has a larger economy. Aided by accessibility apparatus, in 2011, St Kitts and Nevis’ travel and tourism industry was 28 per cent of total GDP, which contributes to 6,500 direct and indirect jobs, and generated 227.6 million (XCD) in visitor exports (WTTC). Moreover, supported by an airport that can accommodate intercontinental flights, foreign investors are investing in St Kitts. Hyatt Hotels Corporation, for example, announced a development plan for the construction of a hotel (Park Hyatt) in St Kitts, scheduled to open in 2015.

Other positive impacts are direct and multiplier impacts. Direct impacts are economic activity generated by airports, – such as the purchase of aviation goods and services, and spendings of airline passengers passing through the region. Multiplier impacts, however, result from the re-circulation and re-spending of direct impacts within the economy. This re-spending of cash can transpire multiple times and takes two forms – indirect and induced. Indirect impacts occur when businesses spend their revenue on expenses, whereas induced impacts occur when employees purchase goods and services. For example, as airport employees spend their salary for housing, food, and services, those expenditures circulate through the economy, resulting in increased spending throughout the economy. So, accordingly, the probability that the economy of St Vincent and the Grenadines will grow because of an international airport is favourable.

In closing, the positive impact of an international airport on a country’s economy goes well beyond the airport fence. We’re in the midst of globalization, and St Vincent and the Grenadines, with its natural beauty (sun-sea-and sand), has the potential of becoming one of leading tourist destinations of the world. So, while the capital project is beyond the scope of all previous ventures, – the largest thus far – the project is essential for the development of the Land of the Blessed.

(“The negative impacts of an international airport: from a tourism development perspective,” by Kenrick Chambers, was published in SEARCHLIGHT on May 14, 2013)

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