A new study by the Singapore-MIT Alliance for Research and Technology’s (SMART) Mens, Manus & Machina (M3S) interdisciplinary research group, alongside collaborators from Massachusetts Institute of Technology (MIT) and National University of Singapore (NUS), has identified a strong statistical association between global air connectivity and patterns of where multinational corporations (MNCs) invest and set up subsidiaries. This is the most comprehensive global study merging 7.5 million firm records with 30 years of international flight data across more than 800 cities in 142 countries.
The study’s significance lies in its unprecedented scale and its new methodology, which goes beyond evaluating the number of direct routes. Previous studies typically examined a small set of large global cities, specific regions or domestic flights, and often covered only short time periods. Additionally, the effect of air connectivity on a city’s attractiveness is often only assessed using local connectivity measures, such as total passenger flows or the number of direct flights to other cities. However, this overlooks the topological configuration of the global air transportation network and the influence of indirectly connected airport cities.
“Rigorous and data-driven research around connectivity is essential to understanding the forces that shape our cities and economies and to uncover the hidden infrastructure that enables global businesses. As cities become more interconnected and strive to evolve into global hubs, insights from large-scale, interdisciplinary research such as this will be critical to guiding sustainable growth,” said Fabio Duarte, Principal Investigator at M3S, associate director of MIT’s Senseable City Lab and co-corresponding author of the paper.
A new lens on a city’s economic competitiveness
The study, titled “Air Connectivity Boosts Urban Attractiveness for Global Firms” and recently published in Nature Cities, adopted a broader methodological approach. Analysing an unprecedented dataset allowed them to observe how improvements in air travel networks influence the expansion of MNCs into new cities.
The research combines firm-level records from the Orbis database with international flight data from the International Civil Aviation Organisation over three decades, from 1993 to 2023.
The study first evaluated pairwise connectivity — the number of direct and indirect flights between the cities in which parent companies and their subsidiaries are located. Then, to evaluate global connectivity, the researchers analysed patterns in the air travel network using network-based centrality measures – including degree (number of direct flight connections), closeness (how easily a city can reach others with minimal layovers), betweenness (how often a city acts as a transfer point between other cities) and eigenvector (a city’s flight routes and the connectedness of its linked destinations) centrality. The study found that pairwise connectivity, alongside degree, betweenness and eigenvector centrality, play a significant role in shaping where multinational corporations establish subsidiaries.
Key findings
Fewer layovers meant more subsidiaries: The study provided strong empirical evidence that air traffic connectivity is a critical coordination infrastructure for multinational corporations, showing a clear correlation between flight convenience and foreign investment. Even one layover is associated with an average of 20% fewer subsidiaries being established, and this rises to 34% with two or more layovers.
Quality of flight connections matters most: A city’s eigenvector centrality – capturing not only a city’s own flight routes but also its indirect connections through its destinations, reflecting its embeddedness in the global air network – was found to be the strongest predictor of how many foreign subsidiaries it attracted. Cities with flight connections to influential global flight hubs consistently outperform those with more flight connections but to less-connected destinations – a 10% increase in eigenvector centrality is associated with nearly a 1% increase in the number of foreign subsidiaries.
Knowledge-intensive sectors rely on connectivity: The impact of air connectivity is especially pronounced in industries that depend on frequent face-to-face interaction, including finance, consulting, technology and other knowledge-based services. For these sectors, direct flights and strong global connections are especially important for attracting investment, while the effect is much weaker for others such as manufacturing and retail…
