Munich Personal RePEc Archive

Impacts of Public Infrastructure Investment in South Africa: A SAM and CGE-Based Analysis of the Public Economic Sector

Mbanda, Vandudzai and Bonga-Bonga, Lumengo (2018): Impacts of Public Infrastructure Investment in South Africa: A SAM and CGE-Based Analysis of the Public Economic Sector.

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Abstract

This paper assesses the general equilibrium impacts of public infrastructure investment in the South African economy by making use of complementary general equilibrium models, such as the social accounting matrix (SAM) multiplier, the Structural Path Analyses (SPA) and the Computable General Equilibrium (CGE) models. Both the SAM and CGE analyses indicate that increasing public economic infrastructure can be an effective way of stimulating the economy in a way that has a positive impact on labour. SPA shows that the main and most important path of influence is a direct influence of the public economic sector on each of the formal labour categories. However, because the public economic sector does not employ informal labour, this labour account is only connected indirectly via intermediate consumption of the construction sector output. This is an important outcome for South Africa, as the results suggest that an increase in public economic infrastructure could help address the problem of unemployment as well as that of low income levels that exacerbate poverty

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