'Evaluate the view that the most effective way to achieve
economic development in South Africa is through improvements
in infrastructure' (20 marks)
Economic development refers to the long term improvement in the living
standards and quality of life. This includes improvements in transport,
public services, poverty education, as well as infrastructure which includes
roads, public healthcare, energy, water systems and digital networks. It
can be measured by a variety of factors, such as the HDI, GDP per capita
and poverty rates.
Firstly, improved transport routes, including roads, bridges and logistic
networks lowers transport costs for firms. This means that South Africa
can increase their exports, and increase domestic supply of their
products, as they can reach consumers faster. South Africa has a large
manufacturing and mining industry, having key minerals such as gold,
coal and diamonds. Improved transport routes would boost productivity
and increase resource allocation efficiency. Lower logistics costs reduce a
firms marginal costs meaning they can compete more effectively in the
global economy against low-cost producers such as China and India.
Moreover, much of South Africa is surrounded by water, meaning
investing into the port, for example though subsidizing the companies that
set up there, may boost exports, and ultimately generating the
government more revenue through taxes from these companies increased
profits. As a result, the government has more capital at their disposable to
invest into public goods for example healthcare, and education which can
boost the countries HDI levels, boost life expectancy and reduce infant
mortality rates, thus leading to an overall economic development. On the
other hand, corruption among senior members of the parliament may
mitigate this benefit, as the money goes elsewhere. This suggests that
while effective once in place, focusing on dealing with political stability in
South Africa might be a more effective way of reaching sustainable
economic development. in the country may Improve transport
infrastructure also strengthens supply chains by reducing delays and
uncertainty, which encourages firms to expand output and invest in
longer-term projects, shifting the PPF curve outwards as seen in the
diagram below:
