![Sample our Global Development journals, sign in here to start your access, latest two full volumes FREE to you for 14 days]({"type":"image" , "src" : "/sda/5929/TOC-Subject-Sample-2021-Global-Development.jpg"})
ABSTRACT
In a first for South Africa, this article draws on literature on infrastructure productivity to model dynamic economy-wide employment impacts of infrastructure investment funded with different fiscal tools. Using a dynamic computable general equilibrium model, the South African investment plan is modelled, given the infrastructure externality. Alternative fiscal scenarios to finance the policy are modelled in the article. In the long run, unemployment decreases for all types of workers under one of the scenarios. In the short run, only elementary occupation workers benefit from a decrease in unemployment; for the rest, unemployment rises.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1In its drive to raise employment levels, the South African government has put in place a number of other policies/programmes such as the Expanded Public Works Programme and the Community Works Programme that also affect location and investment.
2For a detailed discussion of relevant papers in this field, see Aghion & Howit (Citation2000).
3Ayogu (Citation2005) also surveys the theoretical literature on infrastructure and growth and then reviews the empirical evidence globally and within the African region. Overall he concludes that the question is not whether infrastructure matters but precisely how much it matters in different contexts. Ultimately, this is an empirical question that the literature has not yet resolved satisfactorily. In contrast, according to Ayogu, the crucial issue – understanding policy-making processes in infrastructure – remains little understood and largely under-researched.
4The list of equations is available upon request from the authors.
5Refer to Mabugu et al. (Citation2013b) for alternative scenarios without productivity effects.
