MPIA-12100 Impacts of Infrastructure Investment in South Africa: A Dynamic CGE Analysis

Abstract

Policies like the Accelerated and Shared Growth Initiative for South Africa, Critical Infrastructure Programme, Industrial Development Zones and Expanded Public Works Programme were introduced to increase investment in infrastructure in South Africa, among other things. These policies increased the pace of infrastructure investment in South Africa. Investment in infrastructure affects many variables in the economy. It has an impact on productivity, economic growth, prices, consumption, employment, income distribution, poverty and welfare. Static CGE models are invaluable in assessing economy-wide impacts of economic policies but are unable to account for accumulation effects. Thus they are not suitable for effective analysis of the dynamic effects of policies like infrastructure investment. To overcome this shortcoming, a sequential dynamic CGE model, which accounts for accumulation effects and enables the analysis of policy effects through time, will be used. The motivation for this is that infrastructure is a long term investment and thus dynamics are crucial. While many studies on infrastructure investment in South Africa have been done, there are none which use dynamic CGE modelling to assess the economy-wide long run impact of infrastructure investment. A few studies done on the impact of increasing infrastructure investment in other African countries do not account for dynamics as they use static CGE models. The contribution of this study is to assess how public infrastructure investment will affect the whole economy not only in the short but in the long run as well. This will be done using dynamic CGE modelling.


Members

Project leader: Vandudzai Mbanda

Project researchers: Margaret Chitiga | Sinqobile Ncube | Patrick T. Kanda


Journal publication

No journal publications.


Working Papers

No working papers.


Policy Briefs

Title Modified Size Comments Recommendations
Public infrastructure investment in South Africa: a rational growth strategy? 2012-12-19 1285.55KB 0 0

Final report

Title Modified Size Comments Recommendations
2012-09-14 167.3KB 0 1

Proposal

Title Modified Size Comments Recommendations
Impact of Public Infrastructure Investment in South Africa: A Dynamic Micro-simulation CGE Analysis 2010-10-15 116.46KB 0 0

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