JOHANNESBURG: The Infrastructure Research Development Centre (IRDC) on Monday said that relying on foreign investment for economic development always comes at a price, and that South Africa should prepare itself as it is on a quest for investment.
President Cyril Ramaphosa will this week convene the inaugural South Africa Investment Conference where representatives of government, business, and labour will meet with investors in a bid to present the country as an attractive investment destination.
Bongani Mankewu, executive director of IRDC, said that infrastructure is a key component in a country’s ability to capture the gains from trade possible through globalisation as most studies confirm that lowering trade costs by 10 percent through infrastructure investment can increase exports by more than 20 percent.
“The recently released estimates of the output elasticity of infrastructure, which employed a multi-dimensional measure of the physical stock of infrastructure amongst the tools, as opposed to infrastructure spending, is between 0.07 and 0.10. This which translate to a 10 percent rise in infrastructure assets directly increases [gross domestic product] GDP per capita by 0.7 to one percent,” Mankewu said.
