IMPACT OF TARGETED INFRASTRUCTURE INVESTMENT ON ECONOMIC GROWTH AND EMPLOYMENT IN SOUTH AFRICA
Keywords:
Infrastructure impact, Infrastructure investment, Economic growth, Employment, Infrastructure FundAbstract
Infrastructure investment is key to stimulating economic growth, increasing employment, and reducing inequality. Increasing both private and public sector investment has been a strategy taken by several countries to stimulate economic recovery in the post-lockdown era. To realise the National Development Plan (NDP) investment goals, South Africa is advancing infrastructure investment as an avenue
through which long-term economic and social goals can be obtained. This paper empirically assesses the impact of infrastructure investment on economic growth and employment. Specifically, this paper investigates the potential impact of the remaining infrastructure investment allocation in the R100 billion Infrastructure Fund. Scenarios are created in which the share of investment made towards several sectors is adjusted to determine which distribution of investment could yield the greatest impact. From the results, it can be concluded that infrastructure investment can stimulate both economic growth and employment creation, with the largest gains expected in the secondary sector. The greatest impact on gross domestic product (GDP) and employment is achieved when the bulk of the investment is allocated towards utilities, including electricity and water infrastructure. The paper provides empirical evidence to motivate for targeted infrastructure investment directed at sectors which yield the greatest impact on economic growth and employment
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Copyright (c) 2024 Nonhlanhla MSIMANGO, Carla ORFFER, Natalie VAN REENEN
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