The impact of social and economic infrastructure investment on growth and employment in South Africa: a comparative analysis of general government and public corporations.

Abstract

Infrastructure investment plays a vital role in providing the physical structures and systems necessary to support economic activities, which in turn fosters economic growth, job creation, and poverty alleviation. South Africa has launched various policy initiatives to enhance infrastructure development. Given this, the study examines the impact of economic and social infrastructure investment on economic growth and employment from 1992 to 2024 and compares the effects of these investments between the general government and public corporations in South Africa. The study employed the autoregressive distributed lag (ARDL) model and found that investing in economic and social infrastructure significantly boosts economic growth. These findings imply that an immediate injection of capital into both economic and social infrastructure sectors generates a strong growth multiplier, both in the short and long-term, making them exceptionally effective tools for fiscal stimulus The study further investigated the impact of both economic and social infrastructure investment on employment. Economic infrastructure showed a statistically significant positive correlation with employment, while social infrastructure showed both significant positive and negative associations with employment. The negative correlation was particularly evident in the health sector, with a high coefficient of -3.92 observed. This finding contradicts the theoretical premise that a healthier population would result in enhanced productivity and, consequently, higher employment levels. Policymakers ought to reconsider their strategies for health infrastructure funds. The study concluded that capital investment by both the general government and public corporations exerts a significant positive effect on growth and employment in South Africa, emphasizing the need for continued investment in infrastructure to support productivity gains and sustained economic growth.