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This study examines the current levels of underspending in infrastructure projects and the potential impact on economic growth. It evaluates labour and GDP multipliers for the construction sector, highlighting the importance of adequate investment in infrastructure. The analysis reveals the implications of underspending, projecting additional income into the economy and the creation of temporary jobs. Furthermore, it compares the actual infrastructure spending to the budgeted amounts, shedding light on the overall ranking in infrastructure development. The research also addresses key challenges such as inadequately educated workforce, restrictive labour regulations, and inefficient government bureaucracy in enhancing infrastructure. Data from the National Treasury Budget Review (2014) and The Global Competitiveness Report (2013-2014) guides the assessment of infrastructure performance.
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The potential impact on growth Labour multipliers for the construction sector GDP multipliers for the construction sector Direct 0.23 Direct 3.5 Total 1.21 Total 8.8 Induced 0.46 Induced 2.0 Indirect 0.52 Indirect 3.3
Current levels of underspending Actual infrastructure expenditure as a % of budgeted, 2012/13 Source: National Treasury Budget Review (2014)
Impact of underspending Infrastructure spending 2013/14 R847 billion over 3 years Assuming a 50% import component Total local spending of approximately R400 billion 840 000 R30.1 billion 720 000 R26.1 billion Additional income into the economy Additional income into the economy Average number of Temporary jobs created over 3 year period Average number of Temporary jobs created over 3 year period Actual spending Budgeted spending Actual spending Budgeted spending GDP Impact Employment Impact
How are we doing i.t.o. infrastructure? Overall ranking 53 Inadequately educated workforce This little island is beating us Restrictive labour regulations Inefficient government bureaucracy Health and education 135 Higher education 95 Labour market 116 Innovation 39 Financial markets 3 Institutions 41 Economy 95 Infrastructure 66
How are we doing i.t.o. infrastructure? Infrastructure 66 The Global Competitiveness Report (2013-2014)
