INFRASTRUCTURAL CAPITAL EXPENDITURE, TAX REVENUE AND ECONOMIC GROWTH: EVIDENCE FROM SOUTH AFRICA

Oluwagbenle, S. (Ph.D), Olasehinde, I. O., Afolabi, O. S. (Ph.D), Muse, B. O. (Ph.D), Omoniyi O. B.

Abstract

This paper examined impacts of infrastructural capital expenditure and tax revenue on economic growth in South Africa for a period of 43 years (1980 - 2022) using Autoregressive Distributed Lag (ARDL) cointegration technique. The findings ascertained the establishment of a long-run relationship among the variables. Also, findings showed insignificant impact of capital expenditure on the economy of South Africa. In addition, tax revenue had significant impacts on economy in both short and long-run. Unidirectional causality was established between capital expenditure and economic growth of South Africa. Hence, the government should improve on her capital expenditure on infrastructure in order for the Country to achieve an appreciable level of economic growth. In the same vein, tax revenue should be judiciously utilized for the development of infrastructures to spur her economic growth.

Keywords: Capital Expenditure, Tax Revenue, Net Export, Investment, Economic Growth.