Infrastructure and its impact on economic development : the case of South Africa and Brazil

Lazarus, Hilton (2007-12)

Thesis (MDevF (Business Management))--University of Stellenbosch, 2007.

Thesis

ENGLISH ABSTRACT: This study looks at South Africa and Brazil in a comparative sense to determine how infrastructure development and investment since 1970 to 2002 impacted not only on aggregate GDP but also on social indicators such as gross national income (GNI), infant mortality and literacy within these countries. Although Brazil is four times the size of South Africa, the two countries have political and economic situations that are similar. The more recent history of the two countries suggests that infrastructure development and investment have received priority. The research methodology was to review related literature, secondly to statistically measure the impact of infrastructure investment on the factors mentioned using a linear regression model and, thirdly to analyze and discuss the outcomes. The role of government in infrastructure development is argued to be one of limited capital investment and more of a regulatory one with the consequent result of crowding-in private sector investment. Brazil has in recent times followed a route of public-private partnerships with the South African government on the other hand being the principal investor for infrastructure. The magnitude of elasticity of the impact of infrastructure in both South Africa and Brazil was found to be unusually large implying an implausibly high marginal rate of productivity for capital investment. This could be because of the incompleteness of the data obtained. Furthermore, infrastructure investment in Brazil is found to have a larger social impact than in South Africa, except for aggregate GDP. In conclusion, the results of the statistical analysis corroborate the assertion of the various literatures surveyed. The main findings of the analysis in this study do not conclusively suggest that the path followed by Brazil through public-private partnerships has had a far better effect than in the case of South Africa utilizing substantial government investment to promote infrastructure development. Although the study was not geared towards the effect of policies on the impact of infrastructure, especially on the social fabric of developing countries, further research in this area could be undertaken. The impact of individual measures of economic infrastructure such as railways, roads, ports, air travel, telephones and electricity could also be researched to determine their economic impact in South Africa and Brazil.

AFRIKAANSE OPSOMMING: Hierdie studie tref ‘n vergelyking tussen Suid-Afrika en Brasilië om vas te stel hoe die ontwikkeling van infrastruktuur en belegging sedert 1970 tot 2002 nie net op die totale bruto binnelandse produk, maar ook op die sosiale aanwysers soos die bruto nasionale inkomste, die sterftesyfers van babas en die geletterdheidsvlakke van die lande impak. Alhoewel Brasilië vier maal groter as Suid-Afrika is, het die twee lande soortgelyke politieke en ekonomiese situasies. Die meer onlangse geskiedenis van die twee lande toon ook dat infrastruktuur en belegging geprioritiseer is. Die navorsingsmetodologie wat gebruik is, is om eerstens die betrokke literatuur te hersien, tweedens om statisties die impak van infrastruktuurbelegging op die gemelde faktore te meet deur ‘n lineêre regressiemodel te gebruik en derdens om die uitkomste te analiseer en te bespreek. Die rol van die regering in infrastruktuurontwikkeling word beskou as een van beperkte kapitaalbelegging en ‘n meer regulerende een met die gevolglike resultaat van verdringing van privaatsektorbelegging. Brasilië het onlangs die weg van openbaarprivate vennootskappe begin volg terwyl die Suid-Afrikaanse regering andersyds die hoofbelegger in infrastruktuur is. Dit is bevind dat die omvang van die elastisiteit van die impak van die infrastruktuur op beide Suid-Afrika en Brasilië ongewoon groot was, wat impliseer dat daar ‘n ongewoon-hoë marginale produktiwiteitskoers vir kapitaalbelegging was. Dit kan as gevolg van die onvolledigheid van die data wees. Verder het infrastruktuurbelegging in Brasilië ‘n groter sosiale impak as in Suid-Afrika getoon, buiten vir die totale bruto binnelandse produk. Ten slotte bevestig die resultate van die statistiese analise die aannames van die verskeidenheid literatuur wat geraadpleeg is. Die hoofbevindings van die analise in hierdie studie bewys nie dat die weg wat deur Brasilië deur middel van openbaar-private vennootskappe gevolg is ‘n baie beter effek het as wat in Suid-Afrika tot stand gebring is deur die benutting van die omvattende regeringsbelegging om infrastruktuurontwikkeling te bevorder nie. Alhoewel die studie nie gefokus was op die uitwerking van die beleide op die impak van infrastruktuur nie, veral op die sosiale sy van ontwikkelende lande nie, behoort verdere studie op hierdie gebied onderneem te word. Die impak van individuele maatstawwe van ekonomiese infrastruktuur soos spoorweë, paaie, hawens, lugvaart, telefone en elektrisiteit kan ook nagevors word om die ekonomiese impak op Suid-Afrika en Brasilië te bepaal.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/839
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