Public Meets Private: Unraveling the Dynamics of Infrastructure Investment in South Africa
Public Meets Private: Unraveling the Dynamics of Infrastructure Investment in South Africa

Summary/Abstract: Private investment plays a pivotal role in job creation and economic growth. Given its importance, this study scrutinised the dynamics of how public investment, particularly in critical infrastructures, either complements or competes with private investment. The study delved into the intricate relationship between private investment and government-led investment in critical infrastructure in health and electricity generation in South Africa. Quarterly time series data from 2006Q2 to 2023Q2 were used while adopting the autoregressive distributed lag (ARDL) technique. According to the econometric analysis, government spending in health and electricity generation complements private investment. The effects of the investment in the critical infrastructure variables on the ratio of private investment to GDP are quite low, although highly statistically significant. The findings underscore the importance of well-targeted infrastructure investments in driving private-sector development. Overall, this comprehensive analysis contributes to understanding the complex dynamics between public and private investments in the context of critical infrastructure development in South Africa. The findings of this study are essential for policymakers, investors and researchers seeking to enhance the effectiveness of economic policies and foster sustainable economic development in the country.

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