Infrastructure development and population growth on economic growth in South Africa

Stungwa, Sanele and Daw, Olebogeng David (2021): Infrastructure development and population growth on economic growth in South Africa.

Abstract

The objective of this study is to examine the correlation between infrastructure development and population growth on economic growth in South Africa. The study employed Cross-section Seemingly Unrelated regression to analyze the relationship between infrastructure development and population growth on economic growth using an annual panel data collected from nine provinces for the period 2006-2019. The results showed that infrastructure is not an effective instrument to stimulate economic growth. Provincial government expenditure was found to have a positive and significant relationship with economic growth. The study found that unemployment and economic growth have a negative and significant relationship. Moreover, the results revealed that population has a positive and statistical impact on economic growth. The granger causality test found that there is a causality running from population growth to infrastructure unidirectionally, meaning that population growth has an impact on infrastructure development in South Africa. To correct the problem of having harmful infrastructure on economic growth, South African policy makers should ensure that there is no lack of clarity about national objectives and standards and lack of coordination in the development of natural instruments and inconsistent implementation of national objectives. There is a need to invest more on infrastructure in South Africa.

• Item Type: MPRA Paper
• Language: English
• Keywords: Infrastructure, Population, Economic growth, Cross-section Seemingly Unrelated Regression South Africa
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H76 - State and Local Government: Other Expenditure Categories; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure

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