An analysis of the impact of investment in public transport on economic growth of metropolitan cities in South Africa

Abstract

Background: Over the years, the South African government has emphasised improving the metros’ socioeconomic infrastructures because these form an essential catalyst that can boost grassroots development. Despite the considerable increase in investments in transport infrastructure in the metros, the contributions of the metros where all these transport investments are concentrated appear to be making little use of it to promote their grassroots development. Objectives: The study investigated the impact of public transportation on the output growth of South Africa. Method: One-way error component panel analysis is adopted to analyse disaggregated data from eight major metros in the country from 2003 to 2017. Data were mainly sourced on public transport expenditure, total social infrastructure expenditure, total capital formation, labour expenditure and output growth rate from each of the metros. Results: The results were a clear departure from what was obtained by previous studies on transport expenditure and the growth of South Africa. Six of the metros which are the big ones in terms of the population showed a result, which indicated that public transport expenditure did not influence their output significantly; but when combined with other social infrastructure, it exhibited significant impact. However, the results of the remaining two small metros showed that public transport expenditure and its combination with other social infrastructure all had a significant impact on their output growth. Conclusion: This confirms transport infrastructure investment conforms to the theory of the diminishing marginal product of capital. The six big metros should invest more in social infrastructure, which would complement the contemporary transport infrastructure investment. On the other hand, there is still a need to increase public transport infrastructure investments on the smaller metros.