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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:An analysis of economic infrastructure investment in South Africa
Authors:Perkins, PeterISNI
Fedderke, JohannISNI
Luiz, JohnISNI
Periodical:South African Journal of Economics
Geographic term:South Africa
economic development
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2005.00014.x/pdf
Abstract:This paper analyses long-term trends in the development of South Africa's economic infrastructure and discusses their relationship with the country's long-term economic growth. A database covering national accounts data, railways, roads, ports, air travel, phone lines and electricity was established for this purpose. The methodology of M.H. Pesaran, Y. Shin and R.J. Smith (1996, 2001) is used to identify directions of association between economic infrastructure and economic growth. These indicate long-run forcing relationships from public-sector economic infrastructure investment and fixed capital stock to gross domestic product (GDP), from roads to GDP, and from GDP to a range of other types of infrastructure. There is also evidence of potential simultaneity between specific types of infrastructure and GDP. The evidence suggests three main findings. First, the relationship between economic infrastructure and economic growth appears to run in both directions. Inadequate investment in infrastructure could create bottlenecks, and opportunities for promoting economic growth could be missed. Second, South Africa's stock of economic infrastructure has developed in phases. Policymakers should focus on choosing or encouraging the right type of infrastructure at the right time. Third, the need for investment in economic infrastructure never goes away. The maintenance and expansion of infrastructure are important dimensions of supporting economic activity in a growing economy, provided that individual projects are chosen on the basis of appropriate cost-benefit analyses. Bibliogr., notes, ref., sum. [Journal abstract]