Title: Effect of social infrastructure investment on economic growth and inequality in South Africa: a SEM approach

Authors: Itumeleng More; Goodness C. Aye

Addresses: Department of Economics, University of Pretoria, 0002 Pretoria, South Africa ' Department of Economics, University of Pretoria, 0002 Pretoria, South Africa

Abstract: This paper investigates the effect of social infrastructure on economic growth and inequality in South Africa using a SEM approach. We use growth as the mediating variable while controlling for production factors, urbanisation and globalisation. Results show a positive and significant relationship between education expenditure and growth. However there is a negative but insignificant relationship between health expenditure and growth. Furthermore, results indicate a negative but insignificant relationship between education and inequality and a significant negative relationship between health and inequality. Consistent with the Kuznets theory, we find a positive and significant relationship between growth and inequality in South Africa.

Keywords: education expenditure; health expenditure; inequality; SEM; South Africa; social infrastructure investment; economic growth; structural equation modelling; production factors; urbanisation; globalisation.

DOI: 10.1504/IJEBR.2017.082268

International Journal of Economics and Business Research, 2017 Vol.13 No.2, pp.95 - 109

Received: 10 Jun 2016
Accepted: 06 Sep 2016
Published online: 14 Feb 2017 *

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