The role of infrastructural development and economic growth in spatial planning

Abstract

This study is about the influence that infrastructure development can have on the economy. In the current age of globalisation it is necessary to develop constantly to prevent becoming insignificant in the world economy. It is not enough to let development take its own course anymore, the government and private investors must cooperate to accelerate development or else stand the risk of falling behind. South Africa is trying to move from a Third World country to a First World country. Although some of the regions have developed successfully and show the characteristics of a First World country, large parts of the country are still examples of a Third World country. The reason that the Western Cape Province, for example, is moving forward so rapidly and showing an-ever increasing Gross Domestic Product (GDP), is the fact that they have realised the importance of infrastructural investment. Without investing in infrastructure, the economy will be unlikely to grow. This is because there is a positive correlation between infrastructure expenditure and the GDP. While a part of South Africa is focusing on Strictly Social Overhead Capital (SSOC), which entails the development of people, the Western Cape has put more emphasis on Economic Overhead Capital (EOC) such as building roads, bridges. It is argued in this research document that investing in EOC will increase economic growth that will help the region become more developed. If the whole country inherits this approach, it is probable that South Africa remains relevant and even become more competitive in the world economy. When investing in infrastructure the region will maintain their agglomeration advantages and create more comparative advantage ensuring that agglomerations form. Agglomerations form because it is more advantageous to locate at a certain location due to cheaper total costs at these locations. One of the greatest factors influencing an investor’s locational preference is transport costs and therefore transport costs must be held to a minimum. Spatial planning must be adjusted in order to ensure that EOC receives the necessary attention. This study will show how this can be achieved.