Abstract
Background: There has been considerable decline in the investment on road transport infrastructure in recent times, as a result of the dwindling economic investment owing to lowering gross domestic product (GDP) since 2009.Objective: The objective of this study was to examine the relationship between road transport investment (ROTI) and economic development (ED) in South Africa. This article adopts the Harrod–Domar (HD) model of economic growth and development theory, endogenous growth theory and Solow–Swan neoclassical growth model.Method: Data were derived from the South African Reserve Bank, Quantec database and Statistics South Africa (StatsSA) between 1990 and 2014. It used time series, econometric models cointegration and vector error correction model (VECM) to analyse.Result: The results of the estimation demonstrate that the explanatory variables account for approximately 86.7% variation in ED in South Africa. Therefore, there exists a positive relationship between ROTI and ED.Conclusion: This study established a long-run relationship between phenomena and demonstrates the role of road transport investment on economic development in South Africa.
Highlights
The availability of road transport infrastructure investment (ROTI) in a country is of paramount importance, given that it enhances the economic chains and accelerates growth and development in the country
The results revealed that there is cointegration among the variables under examination
Http://www.jtscm.co.za, heteroscedasticity and normality of the residuals, the results from these tests are positive. These results are in accordance with most of the studies such as Peter et al (2015) reviewed the literature in the sense that they confirm a long-run link between the two variables
Summary
The objective of this study was to examine the relationship between road transport investment (ROTI) and economic development (ED) in South Africa. This article adopts the Harrod–Domar (HD) model of economic growth and development theory, endogenous growth theory and Solow–Swan neoclassical growth model. Method: Data were derived from the South African Reserve Bank, Quantec database and Statistics South Africa (StatsSA) between 1990 and 2014. It used time series, econometric models cointegration and vector error correction model (VECM) to analyse
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