Effect of Social Infrastructure Investment on Economic Growth and Inequality in South Africa: A SEM Approach

Itumeleng More () and Goodness Aye ()
Additional contact information
Goodness Aye: Department of Economics, University of Pretoria

No 201601, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper investigates the effect of social infrastructure on economic growth and inequality in South Africa using the Simultaneous Equation Modelling (SEM) approach. Education and hospital expenditure are used as indicators for social infrastructure, the Gini-coefficient as an indicator for inequality and lastly the GDP per capita as an indicator for growth. The data is annual data covering from 1994 to 2013 period. We use growth as the mediating variable while controlling for production factors, urbanisation and globalisation. Consistent with theory and expectations, results show a positive and significant relationship between education expenditure and growth. However there is a negative relationship between health expenditure and growth albeit not significant. Furthermore, results indicate a negative but insignificant relationship between education and inequality and a significant negative relationship between health and inequality. In line with the Kuznets theory, we find a positive and significant relationship between growth and inequality in South Africa. We show the policy implications of our findings.

Keywords: Social infrastructure; education; health; economic growth; inequality; SEM (search for similar items in EconPapers)
JEL-codes: C32 H54 I14 I15 I24 I25 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2016-02
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201601

Access Statistics for this paper

More papers in Working Papers from University of Pretoria, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Rangan Gupta ().