As South Africa celebrates Transport Month this October, Dr Olebogeng Baikgaki of the Faculty of Economic and Management Sciences at the North-West University highlights the crucial role of infrastructure in economic development. Efficient transport systems are essential to stimulate growth, reduce inequality and promote sustainable development.

Dr Baikgaki: “Infrastructure is the fundamental pillar on which economic development and competitiveness are built, along with institutions, the macroeconomic environment, health and primary education. An extensive and efficient infrastructure is critical to the effective functioning of the economy, as it is an essential factor in determining the location of economic activity and the types of activities or sectors that can be developed within a country. Transport is essential for well-functioning economic activity and a key to ensuring the social well-being and cohesion of populations. Transport provides people with their daily mobility and is essential for the production and distribution of goods and services. Adequate infrastructure is therefore a fundamental prerequisite for transport systems. However, in most cases, there are impediments such as insufficient or inadequate transport infrastructure, bottlenecks, missing links and lack of funding to remove such barriers. Solving these problems or barriers is a challenging task.

Infrastructure is critical to a country's economic development and prosperity. Investment in infrastructure contributes to higher productivity and growth, facilitates trade and connectivity, and promotes financial inclusion. Global demand for infrastructure is very high, with an estimated annual cost of USD 3,3 trillion between 2016 and 2030 to keep pace with projected global economic growth, 60% of which is in developing countries such as South Africa. As the developing world’s population grows, the world urgently needs high-quality, sustainable infrastructure that increases economic activity, creates new jobs, reduces income inequality and empowers gender participation. Quality infrastructure is at the heart of the sustainable development goals as it supports inclusive growth and improves access to all.

The role of infrastructure in promoting sustainable economic growth has been recognised over the past two decades. After the financial crisis of 2008 and the COVID era of 2019, infrastructure investment has been promoted as a driver of economic recovery and growth. However, investment gaps are widening, and inequalities are increasing. At the same time, land use policies are ailing and the ecological footprint of human activities is growing faster than ever.

Transport remains the lifeblood of our economy and society. Our roads, rail networks, and logistics hubs at airports and ports are the arteries that breathes life into our economy and our people. The transport sector is an important part of the economy, and a standard tool used for development due to its intensive use of infrastructure. This means that transport infrastructure and economic growth are closely intertwined, which is why it is important to invest in transport infrastructure to support economic recovery. Across the board, there has been a tremendous increase in the economic opportunities arising from the mobility of people and freight and information and communication technologies. Studies have shown a positive relationship between the quality and quantity of transport infrastructure and the level of economic development. That is, a high-density transport infrastructure and highly connected networks are generally associated with high levels of development.

Accordingly, when transport systems are efficient, they provide economic and social opportunities and benefits that lead to positive multiplier effects, such as better access to markets, employment, and additional investment. Conversely, when transport systems lack capacity or reliability, there can be economic costs in terms of reduced or missed opportunities and lower quality of life. Transport infrastructure, such as roads, railways, airports, ports, and other associated facilities, is ubiquitous and critical to the economic and social well-being of modern society, providing personal mobility, access to services and the movement of goods, and facilitating economic activity and social interaction.

A well-developed transport infrastructure makes a country attractive to investors and helps to:

• Reduce distances between regions.
• Increase economic opportunities.
• Reduce income disparities and poverty.
• Facilitate the integration of markets at national, regional, international and global levels.
• Afford less developed communities' access to core economic activities and services.
• Enable workers to access suitable jobs and get to work on time.
• Increase economic efficiency by enabling the rapid and free flow of information.
• Facilitate business communication and informal decision making.

The challenges of the modern world, such as urbanisation and the urgent need to improve access to infrastructure, are forcing many countries to look for new solutions to support economic growth and a sustainable development agenda. At the same time, there is the problem of the infrastructure investment gap, where government development institutions are in desperate need of funds to implement long-term infrastructure projects. According to the Global Infrastructure Outlook, investment needs across 50 countries and seven sectors could reach $97 trillion by 2040. To solve this problem, the active participation of private companies through the PPP framework is proposed.”