ICT infrastructure investment and economic growth in South Africa
Date
2019
Authors
Matlou, Lebogang
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Abstract
The main goal of this study was to analyse the causal relationship between ICT infrastructure investment and economic growth in South Africa. It held the hypothesis that ICT infrastructure investment positively affected economic growth. Additionally, it also sought to test if economic growth, in turn had a positive impact on ICT infrastructure investment (bi-directionality of the relationship between ICT infrastructure investment and economic growth).
Several regression models have been used to test this relationship and the study used Perkins’ model (2005 & 2010) to identify variables that affected economic growth alongside ICT infrastructure investment. These were Gross Fixed Capital Formation, real exchange rate, the Human Development Index and openness of trade.
The study relied on ICT investment data from WITSA from the period between 1992 and 2013. GDP, openness and real exchange rate data was obtained from the South African Reserve Bank. A time series analysis approached was applied in testing the hypothesis of the existence of the above relationship. Procedural tests that were applied were the Augmented Dickey Fuller test and the Philip Peron test to test for stationarity. Data was transformed into stationarity and the Johansen’s co-integration test was conducted to test for co-integration.
It was noted that the variables co-integrated indicating a long term positive relationship between ICT investments and GDP. The Granger Causality tests conducted revealed that ICT was the Granger cause of GDP, GFCF, Openness of Trade and real exchange rate .GDP was not a Granger cause of ICT investment and therefore there was no bi-directionality in the relationship. The study recommended ICT investment incentivisation, the removal of ICT investment barriers and ICT research, education and training to bolster ICT infrastructure investment as this will translate to economic growth for South Africa.
Description
A dissertation submitted in fulfilment of the requirements of the degree of Master of Management in the field of Finance and investments at the Wits Business School South Africa, February 2019
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Citation
Matlou, Lebogang Diale Herbert, (2019) ICT infrastructure investment and economic growth in South Africa, University of the Witwatersrand, https://hdl.handle.net/10539/28573