Examining the role of transport Infrastructure on economic development in South Africa

14 May 2019

Economic development refers to economic growth accompanied by changes in output distribution and economic structures. These changes may include an improvement in the material wellbeing of the poorer half of the population, a decline in agriculture’s share and an increase in service and industry’s share of gross national product, an increase in the education and skill of the labour force, and substantial technical advances originating within the country. Transport infrastructure such as highways, bridges, ports, airports and railways is critical in achieving economic development and growth. The study examined the existing relationship between economic development and transport infrastructure in South Africa from 1960 to 2014. The study applied vector error correction model to examine the relationship between gross national income changes as a measure of economic development and transport infrastructure spending in South Africa. The methodology applied brought about a positive relationship between transport infrastructure and economic development. To promote development and improve productivity through transport infrastructure investment, the government should, therefore, increase funding at the same time maintain a low inflation rate. This can be achieved by monitoring fiscal and monetary policies to promote development rate of the aggregate demand in combination with public transport infrastructure policy and other policies as well. Development and management of transport infrastructure and the provision of public services is recommended to meet the growing transport infrastructure needs in South Africa. Keywords: Economic development, New growth theory, Transport infrastructure, Vector error correction mode