The macroeconomic impact of road construction in rural areas of South Africa
Journal Article
2004
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Journal of the South African Institute of Civil Engineering
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South African Institution of Civil Engineering
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University of Cape Town
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Abstract
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.
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Reference:
Standish, B., & Boting, A. (2004). The macroeconomic impact of road construction in rural areas of South Africa: technical paper. Journal of the South African Institution of Civil Engineering= Joernaal van die Suid-Afrikaanse Instituut van Siviele Ingenieurswese, 46(4),14.