The macroeconomic impact of road construction in rural areas of South Africa

Journal Article


Permanent link to this Item
Journal Title

Journal of the South African Institute of Civil Engineering

Journal ISSN
Volume Title

South African Institution of Civil Engineering


University of Cape Town

This paper examines the macroeconomic impact of labour based road construction in rural, underdeveloped areas. The macroeconomic effect is measured by the contribution to gross domestic product (GDP), number of indirect jobs created nationally, contribution to taxes and contribution to indirect household income for each of eleven rural road construction projects. The paper has two objectives. The first is to determine the overall multiplied impact of road construction in rural underdeveloped areas in South Africa. The second is to determine the macroeconomic impact of marginal changes in the use of labour and plant in road construction. Input-output analysis was used to analyse a total of eleven projects. It was found that the GDP multiplier ranged between 1, 34 and 1, 53 with an average of 1, 45. The cost of creating an indirect job ranged from R95 250 to R145 972 with an average cost of R113 835. The effect of substituting labour for plant in the construction methods is examined by means of sensitivity analysis. The sensitivity analysis shows that as the proportion of labour increases relative to plant so the macroeconomic benefits increase and therefore by implication poverty alleviation.