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An Analysis Of Economic Infrastructure Investment In South Africa

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  • PETER PERKINS
  • JOHANN FEDDERKE
  • JOHN LUIZ

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, and may facilitate further quantitative research. PSS (Pesaran, Shin and Smith, 1996, 2001) F-tests are 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. Firstly, 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. Secondly, 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. Thirdly, 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. Copyright 2005 Economic Society of South Africa.

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Bibliographic Info

Article provided by Economic Society of South Africa in its journal South African Journal of Economics.

Volume (Year): 73 (2005)
Issue (Month): 2 (06)
Pages: 211-228

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Handle: RePEc:bla:sajeco:v:73:y:2005:i:2:p:211-228

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Citations

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Cited by:
  1. Tania Ajam & Aron Janine, 2007. "Fiscal Renaissance in a Democratic South Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(5), pages 745-781, November.
  2. Sang H. Lee & John Levendis & Luis Gutierrez, 2012. "Telecommunications and economic growth: an empirical analysis of sub-Saharan Africa," Applied Economics, Taylor & Francis Journals, vol. 44(4), pages 461-469, February.
  3. Potgieter, Petrus H., 2010. "Water and energy in South Africa – managing scarcity," MPRA Paper 23360, University Library of Munich, Germany.
  4. Johan Fourie, 2008. "A note on infrastructure quality in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 25(4), pages 481-494.
  5. Sajal Ghosh & Rohit Prasad, 2012. "Telephone penetrations and economic growth: evidence from India," Netnomics, Springer, vol. 13(1), pages 25-43, April.
  6. Johan Fourie, 2006. "Some policy proposals for future infrastructure investment in South Africa," Working Papers 05/2006, Stellenbosch University, Department of Economics.
  7. Perotti, Roberto, 2007. "Fiscal policy in developing countries : a framework and some questions," Policy Research Working Paper Series 4365, The World Bank.
  8. Johannes Fedderke & Željko Bogetic, 2005. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," Working Papers 39, Economic Research Southern Africa.
  9. John Luiz, 2010. "Infrastructure investment and its performance in Africa over the course of the twentieth century," International Journal of Social Economics, Emerald Group Publishing, vol. 37(7), pages 512-536, July.
  10. Zeljko Bogetic & Johannes Fedderke, 2005. "Infrastructure and Growth in South Africa: Benchmarking, Productivity and Investment Needs, paper presented at Economic Society of South Africa (ESSA) Conference, Durban, 9/7-9/2005," Public Economics 0510006, EconWPA.
  11. Wim Naudé, 2011. "Economic Development in Sub-Saharan Africa: The Case of the Big Four," Working Papers 2011/34, Maastricht School of Management.
  12. Fedderke, J.W. & Perkins, P. & Luiz, J.M., 2006. "Infrastructural investment in long-run economic growth: South Africa 1875-2001," World Development, Elsevier, vol. 34(6), pages 1037-1059, June.
  13. Bogetic, Zeljko & Fedderke, Johannes W., 2006. "International benchmarking of South Africa's infrastructure performance," Policy Research Working Paper Series 3830, The World Bank.
  14. Cheteni, Priviledge, 2013. "Transport Infrastructure Investment and Transport Sector Productivity on Economic Growth in South Africa (1975-2011)," MPRA Paper 53175, University Library of Munich, Germany, revised 18 Jul 2013.

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