Resumo

PIENAAR, WJ. Determination of the increased national income that stems from the provision and use of economically viable roads. Tydskr. geesteswet. [online]. 2024, vol.64, n.1, pp.67-85. ISSN 2224-7912.  http://dx.doi.org/10.17159/2224-7912/2024/v64n1a4.

The purpose of this article is to demonstrate how the once-off increase in regional income that will result from investment in roads and the recurring increase in regional income that will stem from the use of economically viable new roads can be estimated. Once-off economic benefits occur because of the multiplier effect triggered by the initial investment expenditure on a road, while recurring economic benefits result from the income accelerator effect that use of the road during its service period will have. To determine the regional income multiplier effect of the investment expenditure on a proposed road during its construction period, it is necessary to estimate (i) the tax amounts included in the investment amount as a ratio of the total project investment amount, (ii) the monetary amount saved by project workers as a ratio of the total project investment amount, and (iii) the expenditure on imported project inputs as a ratio of the total project investment amount. An analysis that incorporates the above-mentioned three fund leakages from the circular flow of regional income will show that the representative income multiplier of South African rural paved road construction projects has a value of 4,58. The gross national income multiplier effect stemming from road construction expenditure can be categorised as follows: In the rating scale above, a gross national income multiplier effect stemming from road construction projects with a value of less than 2,00 is regarded as "poor", because such a multiplier value is usually associated with economically unviable road projects. Gross national road construction multiplier effects with a value of 2,00 or more are associated with economically viable projects. An analysis as referred to above will show that, with a once-off gross income multiplier value of 4,58, the construction of economically viable roads will afford the government a "very good" opportunity to generate income effectively, especially considering that the national economy-wide gross income multiplier in South Africa is 3,27, which shows that the gross income multiplier of road construction is 40% higher than the economy-wide gross income multiplier. The reasons why the once-off gross regional income multiplier stemming from construction expenditure on rural road projects is "very good" are as follows: Multiplier Rating 1 – 1,99    Poor 2 – 2,99    Satisfactory 3 – 3,99    Good 4 – 4,99    Very good < 5           Excellent  (1) A substantial proportion of the payroll of road construction workers is subject to zero or low personal income tax rates. (2) The propensity to consume among rural, unskilled and semi-skilled workers (in areas where rural roads are constructed) is generally high, which implies a low savings leakage. (3) Labourers needed for road construction are usually recruited from (or from close by) the areas where a road is to be built. Furthermore, low-income earners tend to buy and consume goods that are produced locally. (4) Generally, there is a relatively small need to import economic resources for road construction projects. Items like timber, sand, stone, gravel, filling material, bitumen, cement, steel and most of the road construction equipment are of regional or, at least, South African origin. The pace at which an economically viable road will stimulate regional income will be reflected by the new traffic it induces and any existing traffic that it diverts from less beneficial roads. In the social cost-benefit analysis of a road, it is estimated by what proportion induced and diverted traffic will increase the road user surplus. This expected proportional increase in road user surplus will accelerate (stimulate) the once-off regional multiplier and is termed the "regional income stimulation factor". Project-driven induced investment activities - i.e. downstream investment activities made possible by the provision of the road - usually (a) involve technically more sophisticated construction projects than the analysed road itself, (b) require the importation of a greater proportion of finished goods and specialised equipment, and (c) involve more skilled and highly skilled workers, whose income is subject to high income tax rates and who exhibit a higher propensity for saving than unskilled workers. Such downstream activities will collectively have a greater leakage effect than that incorporated in the once-off regional multiplier pertaining to construction of the road, which will depress the magnitude of the recurring regional income accelerator. The different formulae used to calculate the recurring income accelerator are detailed in the body of the article.

Palavras-chave : economic impact analysis; regional income multiplier analysis; regional income accelerator analysis; road construction project; road investment; rural roads; taxation leakage; savings leakage; import leakage; road user cost; non-road user cost.

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