The impact of electricity on economic development of South Africa for the period 1981-2013

Abstract

South African government is been investing greatly on electricity infrastructure, due to crisis that has plagued Eskom. Electricity demand in the country has outstripped supply and Eskom did not think of expanding its capacity, thus the crisis of electricity which has lead to load shedding. The paper aims to investigate whether electricity causes economic development for period 1981 to 2013, economic development is a goal that is been pursued by the country and thus the need to investigate whether electricity crisis foreseen will negatively affect the country in reaching its development. Many papers have been investigating the relationship between electricity and economic growth, while avoiding economic development, the practical importance of the study is that it will add to current knowledge since is mostly conceived that economic growth and development is one in the same thing. The study will help policy makers in making calculated decision when they utilise government resources in electricity infrastructure as a component to improving human lives. Key results found are electricity causes economic growth, while for other variables education and healthcare there was no causation after utilisation of Granger Causality test. Economic growth alone is not sufficient enough to achieve economic development, since you need all the human index properties to be positively affected.