The impact of freight infrastructure investment on employment in South Africa

ABSTRACT

The purpose of the current study is to assess the economic impact of Transnet’s infrastructure investment on employment in the South African economy. We used data from Transnet, the South African Reserve Bank and Quantec dating from 1992 to 2016. Hausman–Taylor, pooled OLS, random effects and dynamic fixed effect models are used to validate the results. The estimated results reveal that capital investment in rail transportation creates employment, while investment in pipelines and seaports does not affect the employment level in the South African economy. In terms of the sectors of the economy, our findings show that Transnet’s investments in rail, seaports and pipelines have a significant impact on mining for all the skill levels. An analysis of each transportation mode reveals that investments in rail affect the employment in agriculture and mining sectors. For the seaports and pipelines, jobs originate from the mining, wholesale and retail sectors.

KEYWORDS:

• Transnet’s investments
• employment
• panel causality
• endogeneity
• Hausman and Taylor

Acknowledgements

The author(s) would like to thank the editor(s) and the anonymous reviewer(s) for their valuable comments. The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Interested readers are referred to Dumitrescu and Hurlin (2012) methodological framework for more details.

2 We only report results for lags 1 and 2 since the time series dimension of our data is not long enough to rely on higher lags. However, the analyses with higher lags (1 to 5, not reported) concur.