The economic importance of an optimal road investment policy in South Africa

Abstract

Productive expenditure on road infrastructure contributes to economic growth as a factor of production, complement to other factors of production, stimulus to factor accumulation, stimulus to aggregate demand, and industrial policy tool. On the other hand, unproductive or insufficient investment in road infrastructure may crowd out private sector investment, increase operational costs, reduce the life-span of private sector capital, necessitate private capital adjustment costs, decrease labour productivity, and impinge on human development. This paper uses economic growth theory to explain the roles of road infrastructure investment in the growth process, with reference made to studies that confirm the relevance, direction, and magnitude of these effects in South Africa. Details of national development policies, the geographic structure of the South African economy, the state of the country’s rail sector, and freight, personal travel, proximity to basic services, rural-urban migration, and household agriculture statistics are also incorporated in the discussion to emphasise the importance of sound road investment policy in South Africa.