State infrastructure spend will not achieve economic growth
There is no clear economic rationale for government investment, yet as the economy contracts, the government continues spending
SA, and for that matter the world, has a near dogmatic faith in infrastructure investment as the holy grail for economic growth and development. Infrastructure investment drives development aid institutions and development banks across the world. Since the New Deal after the Great Depression (1929-1933), all interventionist-inclined policies and economies believed that government spending is key to economic growth.
Not only Roosevelt in the US and Stalin in the USSR relied on large-scale public works programmes — SA also had its fair share of such programmes in the 1930s. This theme was maintained through the apartheid years. Unsurprisingly, this approach was adopted for implementation with a renewed vigour after 1994. It was the basis of the Reconstruction and Development Plan and has featured strongly in all government policies ever since...