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Original Research
Assessing the impact of road transport infrastructure investment on economic development in South Africa
Submitted: 14 June 2017 | Published: 20 September 2017
About the author(s)
Anathi Hlotywa, Department of Economics, University of Fort Hare, South AfricaEmeka A. Ndaguba, Institute of Development Assistant Management, University of Fort Hare, South Africa
Abstract
Background: There has been considerable decline in the investment on road transport infrastructure in recent times, as a result of the dwindling economic investment owing to lowering gross domestic product (GDP) since 2009.
Objective: The objective of this study was to examine the relationship between road transport investment (ROTI) and economic development (ED) in South Africa. This article adopts the Harrod–Domar (HD) model of economic growth and development theory, endogenous growth theory and Solow–Swan neoclassical growth model.
Method: Data were derived from the South African Reserve Bank, Quantec database and Statistics South Africa (StatsSA) between 1990 and 2014. It used time series, econometric models cointegration and vector error correction model (VECM) to analyse.
Result: The results of the estimation demonstrate that the explanatory variables account for approximately 86.7% variation in ED in South Africa. Therefore, there exists a positive relationship between ROTI and ED.
Conclusion: This study established a long-run relationship between phenomena and demonstrates the role of road transport investment on economic development in South Africa.
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