For all specifications, estimation results confirm adjustment to equilibrium (see the ECM - parameters, which correspond to the φ-parameters of equation 8). Moreover, for all specifications the Hausman tests (denoted h-tests) confirm the legitimacy of the PMG estimator by failing to reject the homogeneity restriction on the long-run coefficients for South African manufacturing sectors.

The capital-labor ratio, the skills ratio and the net export ratios continue to report statistical significance, and the direction of association already discussed under section 5.1.1. Since these variables have already been the subject of discussion, we focus on results for the infrastucture measures under instrumentation instead.

In short, under instrumentation the general finding for the infrastructure measures is that statistical significance of the infrastructure is now uniform (with the exception of the PORTS measure), and in general the elasticity of labor productivity with respect to the infrastructure measures is higher than in the absence of IV estimation.

The two aggregate measures of economic infrastructure, the stock and the investment flow given by lnGFCF and lnFCS respectively, are now both positive and statistically significant, with elasticities of 0.20 and 0.19. Under instrumentation, controlling for possible endogeneity, the short-run crowd out effect noted in section 5.1.1 is now absent, with both short run and long run effects of infrastructure testing positive.

The railway measures consistently report statistically significant and economically strong positive elasticities with respect to labor productivity - with no exception. Specifically, the extensiveness of the railway network (the kilometers of railway track - lnRAIL) returns a strong labor productivity elasticity of 0.81, the number of locomotives (lnLOCO) and the goods stock (lnGOODS) return elasticities of 1.04 and 1.03 respectively, with coaching stock (lnCOACH) returning a somewhat lower elasticity of 0.39. The carrying capacity of goods stock (lnCCAP) remains strong at an elasticity of 0.68, while railway passenger journeys.(lnRPASS) and revenue earning traffic have long run elasticities of 0.43 and 0.32 respectively.

Again in contrast to results for un-instrumented infrastuctural measures, all roads infrastructural measures now have statistically significant, positive, and often economically very strong impacts on labor productivity. The total roads measure (lnTRDS) has the strongest elasticity, 2.95, followed by paved roads (lnPRDS), 1.08, passenger and goods vehicles, with elasticities of 0.43 and 0.35 respectively.

Of the remaining transport infrastructure measures, air passenger traffic (lnSAA) reports a statistically significant elasticity of 0.25, though that for aggregate air passenger traffic is somewhat lower at an elasticity of 0.05, though it remains statistically significant.

The cargo handled by ports (lnPORTS) measure proves to be the only statistically insignificant infrastructure measure under IV estimation. However, given that the ports infrastucture measure is the relatively most unchanging infrastructure measure over the sample period for estimation in this study, it is also the least likely to suffer from feedback effects from the productivity measure. Hence, the statistically significant, and positive elasticity of 0.18 obtained in the absence of IV estimation, may well be the more plausible measure of the economic impact of port infrastucture.

In contrast to the findings without instrumentation, and in line with the aggregate findings for South Africa, electricity generation is positively, and statistically significantly related to labor productivity in the manufacturing sector of South Africa, with an elasticity of −0.05, though the impact of electricity generation remains considerably weaker than the finding reported for the economy in aggregate (elasticity of 0.2 − 0.5 depending on specification).

Finally, both telecommunications measures (lnFTEL for fixed lines, and lnTEL for total telephone connections) return positive and statistically significant elasticities, of 0.05 for fixed lines, and 0.41 for total telephone lines.

In summary, therefore, the findings on the impact of infrastructure on South African manufacturing sector labor productivity suggest that both statistical and economic significance attaches to transport infrastructure in various dimensions. Importantly, accounting for the possibility of feedback effects from output per worker to infrastructure measures, serves to render all infrastruc16