The Effect of Transnet's Capital Expenditure and Investment in Various other Selected Sectors of the South African Economy

Nicholas Ngepah, Joel Eita, Mduduzi Biyase and Charles Saba
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Mduduzi Biyase: School of Economics, College of Business and Economics, University of Johannesburg, Auckland Park Kingsway Campus Johannesburg, South Africa
Charles Saba: School of Economics, College of Business and Economics, University of Johannesburg, Auckland Park Kingsway Campus Johannesburg, South Africa

Economia Internazionale / International Economics, 2023, vol. 76, issue 1, 65-90

Abstract: As South African government continues to inject capital into its state-owned enterprises, the question is, has the capital injection into Transnet brought about investment in the different economic sectors? Addressing this question is critical, given the poor performance of state-owned companies in the past two decades. A battery of estimation techniques were utilised to achieve our objective. The findings from the causality results suggest that Transnet’s capital expenditure results in investment in the South African economy. The findings robustly confirmed that Transnet's capital expenditures are positively and significantly associated with levels of investment, although the impact differs by sector. The study posits that the impact occurs through the degree of backward and forward linkages that Transnet’s activities have with the rest of the economy. It is suggested that significant investment in Transnet should be accompanied by linking Transnet’s procurements with local content within South Africa’s economic sectors. L’effetto della spesa in conto capitale di Transnet e degli investimenti in diversi altri settori dell’economia del Sud Africa Poiché il governo sudafricano continua a immettere capitali nelle sue imprese, la domanda che ne deriva è: l’immissione di capitali in Transnet ha portato ad un aumento degli investimenti nei vari settori economici? Non è facile rispondere a questo quesito, data la scarsa performance delle aziende statali negli ultimi vent’anni. Per realizzare il nostro obiettivo abbiamo utilizzato una serie di tecniche di valutazione. Le evidenze dei test di causalità suggeriscono che la spesa in conto capitale di Transnet si traduce in investimenti per l’economia sudafricana. Infatti, tali risultati confermano che la spesa in conto capitale di Transnet è positivamente e significativamente associata agli investimenti, benché l’impatto sia differente da settore a settore. Secondo lo studio tale impatto si realizza tramite le connessioni che Transnet ha con gli altri settori economici. Le conclusioni suggeriscono che significativi investimenti in Transnet debbano essere accompagnati da appalti di Transnet banditi a livello locale all’interno dei settori economici del Sud Africa.

Keywords: Fixed Effects-IV; Transnet; Endogeneity; Hausman and Taylor (search for similar items in EconPapers)
JEL-codes: C22 C32 E22 (search for similar items in EconPapers)
Date: 2023
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