Construction linkages in a developing economy: the case of Sri Lanka

The importance of the construction industry stems from its strong linkages with other sectors of the economy. Despite the extensive research on input–output analysis and sectoral linkages of construction, a gap is found in the literature dealing with developing economies. The objective is to study the construction linkages in a developing economy using input–output tables compiled since the 1970s in Sri Lanka. Results show that the share of construction in gross national product and national income is lower in Sri Lanka than in developed countries. In Sri Lanka, the share of manufacturing in GNP declined while the share of services has increased with economic development. The backward linkage indicator ranges between 0.364 and 0.457 during the period of 1970–2000 while output multiplier ranges between 1.496 and 1.641 indicating the ‘pull effect’. The ‘push effect’ is found to be very insignificant. An aggregated sectoral analysis reveals high dependence of construction on manufacturing followed by services. The trend analysis shows an increasing dependence of construction on the services sector. The direct and total inputs from manufacturing and services have increased over time.     

Exploring the dynamics of the Turkish construction industry using input–output analysis

Construction is commonly regarded as an important industry in economic policy making owing to its strong interactions with other sectors in the economy. Using six national input–output (IO) tables compiled to date and economic data for the period between 1969 and 2006, the behaviour of the Turkish construction sector and its relationships to investment, income and to other sectors in the economy are examined. Analysis reveals that the construction industry is losing its propulsive role and that it tends to exaggerate the fluctuations of the economy. The examination of lead and lag times between changes in GNP, construction activity and investments show that public sector spending cuts, in particular, have significant effects on the amplitude and the timing of slumps of the industry. The analysis of linkage indicators indicates that for the whole period under consideration the construction industry has high linkages with only one other industry. Thus the ‘leading’ role it plays in the economy is questioned.     

An input–output analysis of Thailand's construction sector

Three input–output (IO) tables compiled between 1995 and 2000 were used to examine the significance of the construction sector and its relationships with other sectors of the Thai economy. The pull and push effect of the Thai construction sector to the national economy indicated that the former is much larger than the latter. Additionally, the relatively high output multipliers and backward linkage indicators showed that the construction sector had the potential to trigger off production in many economic sectors linked to it. An aggregated sectoral analysis revealed the high dependence of construction on manufacturing followed by services. The findings also suggest that the trends of the profile of inputs and outputs are correlated to the economic conditions in Thailand at the time the IO tables were compiled. Finally, the results of employment analysis showed that although the share of construction sector in direct employment generation may not be very large, its economic importance lies in its direct and indirect contribution to employment through strong backward linkage effects. Consequently, when its backward linkages and output multiplier are considered together with the employment opportunities latent within it, then the construction sector could be a major contributor to the economic growth of Thailand.     

Regional cost-of-living differentials,rural–urban migration,and the contribution to economic growth

Using a multi-region, multi-sector dynamic model of an economy with rural–urban migration fit to Turkish data, this paper explores the evolution of each region's output and factor allocation as well as inter-regional disparities that emerge with migration. Migration or residence decision of households is endogenous with respect to regional cost-of-living differentials. Results show that migration slows down and dampens the shift of labour from urban manufacturing to services, despite the increase in demand for urban services. It is also established that rural–urban migration contributes positively to growth while the reallocation of labour within each region proves to be unfavourable.     

Work goal orientation of construction professionals in Turkey: comparison of architects and civil engineers

The construction industry is a significant part of the global economy, affected by and affecting all dynamics of global competition. However, there seems to have been a limited amount of research conducted on differences between countries through the construction industry's culture. Such comparisons are crucial to identify the cultural factors that are likely to influence the competitive advantage of the Turkish construction industry at both domestic and international levels. Cultural similarities and differences in work goal orientation are compared between selected groups of professionals in the Turkish construction industry. We aim to provide information on the work goals of both civil engineers and architects involved with the construction sector in terms of occupation, gender and age, respectively. Hofstede's VSM question form was used to establish cultural profiles of the participants. The cultural dimensions of architects and civil engineers provide a sample picture of Turkish construction industry.     

Industry financial ratios—application of factor analysis in Turkish construction industry

Turkish economy has been hit by various economical crises between the years 1998 and 2001 and the economic stagnation still continues. Past experiences in various countries show that it is vitally important to encourage construction activities in order to get out of stagnation, as construction output directly affects about 200 other sectors and industry financial ratio analysis is a means to provide a basis for the governments to undertake corrective action. However, there are over 50 financial ratios that can be used during analysis and some are more important than the others for different industries. Previous research has shown that there are about 25 factors that are important for the construction companies. This, in turn, requires elimination of unrelated data. Factor analysis is a data reduction and classification technique, which can be applied in financial analysis. Factor analysis was thus applied to the financial data collected from Turkish construction companies for a 5-year period in order to determine the financial indicators that can be used to analyse the financial trend of the industry. Five independent factors, i.e. liquidity, capital structure and profitability, activity efficiency, profit margin and growth, and assets structure were identified to be sensitive to the economical changes in the country. The results of the factor-based analysis can be used both by the government to analyse the changes in the industry with respect to time and by the construction companies to analyse their financial state with respect to their rivals.     

建筑业对经济增长的长期和短期影响

因为建筑业对经济具有很强的带动作用,建筑业可以发展成为国民经济的支柱产业。但这种观点缺乏明确的实证依据。采用协整、葛兰杰因果检验与误差修正模型等方法,以四川省为例,分析了建筑业对经济增长的长期和短期影响,发现长期来看,经济与建筑业保持长期均衡关系,建筑业增长将带动经济增长,但带动作用小;短期内建筑业增长不能预示经济增长。因此,从四川省来看,政府不能用建筑业短期刺激经济,但可以采用稳健的建筑业发展政策以促使国民经济长期发展。     

An export-base analysis of Louisiana's petroleum driven economy

Louisiana's economy has traditionally relied on industries that are intensive in natural resource utilization as the basis for economic growth. The dramatic energy price increases during the 1970s provided the incentives for this economy to increase its specialization in the mining and processing of petroleum-based products. A differential export-base model using ordinary least-squares (OLS) regression was developed in this paper for estimating aggregate employment multipliers. Results from the analysis indicate that oil and gas mining, chemical and petroleum manufacturing, and lumber and paper production are highly significant employment generators. Mining employment was estimated to be highly dependent on petroleum prices. By interfacing the employment demand equation with the economic base model, specific and general petroleum employment impacts are assessed. The current recession in the oil and gas mining industry is having a major impact on employment, income and public finances for this region.     

基于VAR模型的城镇化进程与建筑业发展关联性分析

基于VAR模型对我国1995~2014年的城镇化进程相关指标和建筑业发展相关指标数据进行分析。以城镇人口数量和人均GDP作为衡量城镇化进程的主要指标,以建筑业增值作为衡量建筑业发展的主要指标。结果表明:我国城镇化进程与建筑业发展之间有显著的影响,城镇人口数量的变动和人均GDP的变动是引起建筑业发展的原因。方差分解的结果显示,城镇人口和人均GDP对建筑业变动的贡献分别为6.77%和29.97%。随着城镇化的发展,城镇化对建筑业的拉动作用逐渐明显,在滞后期为4年后,趋于稳定状态。     

Sources of competitive advantage of Turkish construction companies in international markets

Michael Porter's diamond framework, a relatively recent attempt to improve our existing knowledge on the sources of competitive advantage, is applied to the Turkish construction industry. The results of this undertaking challenge a common approach that attributes Turkish contractors' success in international markets to labour cost advantages and geographic and cultural proximity to several promising markets. In the light of the diamond framework, Turkish contractors' advantages are found not to be limited to these ‘factor conditions’ and ‘chance’ events. There are other important advantages behind their success, such as the existence of a dynamic home market, favourable entrepreneurial variables, and pressures to upgrade stemming from intense domestic rivalry. The analysis also points to the areas in which they face troubles, including problems induced by the government, financing difficulties and the weak international position of the Turkish design engineering and consultancy services industry.     

Responses of selected economic indicators to construction output shocks: the case of Singapore

The volume of construction output fluctuates in response to changes in demand and supply conditions. Due to the multiple linkages that the construction industry has with other economic sectors and the entire economy, the output shock is propagated through the economic system and reflected in several economic indicators, such as the outputs of other sectors, balance of payments and general prices. A study is reported on the short-term responses of some economic indicators in Singapore following a shock in the construction output, using the Granger causality approach, the impulse response function and variance decomposition analysis. Construction output shock had significant impact on the outputs of the commerce sector and ‘other services’. The heavy reliance of the Singapore construction industry on imported inputs has a direct impact on the balance of payments.     

A service-oriented integrated information framework for RFID/WSN-based intelligent construction supply chain management

As buildings are now taller, larger, and more complex, it has become increasingly more difficult to secure stockyards for materials and to resolve the surrounding traffic problems, creating an increased need for Just-In-Time (JIT) delivery. To support JIT delivery, it is necessary to build a framework that can facilitate the collection and share of information on construction components and material flow throughout the whole supply chain process. Many researchers have suggested that radio frequency identification (RFID) and wireless sensor network technologies could improve the effectiveness and efficiency of JIT management. In addition, service-oriented architecture (SOA), the services of which enable the interfacing of a heterogeneous system environment of parties involved in the supply chain management process, is suggested in the manufacturing industry as one of the solutions for effective collection and sharing of information in supply chain management. However, the construction industry has limits in applying the framework suggested in the manufacturing industry since the supply chain process in the construction industry is extremely dynamic due to frequent changes in the design and plans of construction projects. Therefore, the objective of this research is to develop a seamlessly integrated information management framework that can provide logistics information to project stakeholders for their decision making. The pilot test of the framework developed in this research showed that it can improve time efficiency by about 32% compared to the traditional supply chain management. The result of this research is expected to be utilized effectively as a basic framework to manage information in RFID/WSN based construction supply chain management (CSCM) environments.     

Forthcoming events

Research in China into building economics is currently focused on the transition from a centrally planned economy to a market economy. Particular attention is being paid to the theoretical and practical issues arising from the economic reforms. Outside China, there is little known about the various organizations and individuals involved in this field. Their work is funded through the Ministry of Construction and the China National Science Foundation. It is difficult to get commercial sponsorship for this kind of research. Research has focused upon such issues as the role of the construction industry in the national economy, the use of competitive tendering, price formation, urban housing, structuring of the industry and of firms, project management, expert systems and management information systems. There have been some notable successes in terms of building economics researchers influencing the way in which the construction industry is dealt with in China. Future research will be aimed at converting state enterprises to true companies and devising the means to deregulate the pricing of built facilities and construction services without disrupting the market.     

建筑业增长差异及影响因素研究 ——以江浙沪为例

引入变异系数、基尼系数及泰尔指数分析了江浙沪三地建筑业发展差异的演变动态,结果表明自1999 年后三地的建筑业差距呈缩小趋势。建立面板数据模型分析了江浙沪三地1998~2009 年建筑行业发展的影响因素,研究发现,GDP、开放度、城市化水平等七个指标对地方建筑业发展均有正的显著影响,但对不同地区的影响强度不同。较落后的地区,相同因素影响的强度反而较大,从而使得整体差异变小。     

The changing input structure of the US construction industry: a longitudinal analysis

Eleven input–output tables are used for analysing the technological changes of the US construction industry from 1947 to 2002. Over the years, the industry has been characterized by a significant input shift that reflects the evolution of the USA towards services and away from a manufacturing‐based economy. This evolution is also reflected in the 1997 adoption of a new classification system of the US industries by the Bureau of Economic Analysis (BEA). Changes are also found in analysing the direct requirements of two key sectors of the industry, residential and highway construction, during the 1967–1997 period. New materials and labour‐saving machinery have been some of the major drivers in the changing input structure of the two considered sectors. The study demonstrates the importance of using very long series of data and input–output tables with more than 400 industries for the further understanding of the secular changes of the construction industry and its constituent sectors.     

Crisis management in Turkish construction industry

Various economical crises have affected Turkish economy during the last decade and construction industry has always been among the hardest hit; giving the idea that a comprehensive approach to crisis management is unavoidable. However, literature showed no findings related with crisis management applications by construction companies. Thus, a questionnaire survey was undertaken by the top management of 120 construction companies to investigate the degree of crisis management applications throughout the industry, mainly focusing on the outcomes during the economical crisis in 2001. Frequency analysis, Likert scale of comparison, Thurstone's paired comparisons, Pearson's chi-square test and Fisher's exact test were used to evaluate the results.     

Population migration and economic restructuring in the United States

"This article demonstrates that sectoral employment shifts associated with the migration pattern changes of the 1970s are very different than those for the period 1955-60 to 1965-70. Changing competitiveness for jobs in manufacturing and other traditional basic sectors of the economy cannot account for the greatly accelerated levels of core-periphery net outflow that have been the dominant characteristic of interstate movement during the 1970s and 1980s. Instead, an interconnected set of activities that includes government, services, trade, and construction is associated with the broadscale shifts in the geographic pattern of the United States' population. The causal linkage from migration to employment change assumed heightened importance during the 1970s."     

Is construction an industry?

There has been a frequent misconception in analyses of construction sectors of the national economy: the tendency to describe these activities as ‘an industry’ or a small and stable set of ‘industries’. This has led to confusion. Construction was inappropriately assimilated to various forms of manufacturing industry. Characteristics of the construction process were treated as ‘problems’, to whose solution substantial energies were unnecessarily diverted. There has been muddle about the extent to which macro-level planning is appropriate, notably on R&D strategies and innovation for improved industrial efficiency. Construction projects increasingly use unfamiliar technological bases, comparable to ‘technology fusion’ in other sectors. A more fruitful emphasis may be to regard construction as organized as agglomerations of projects - rather than as a discrete industry or a fixed constellation of firms. The idea of the ‘demand chain’ is introduced.

The paper concludes that a ‘technological paradigm’ should replace the ‘industry paradigm’ and that an enduring question remains to explore what is meant by construction ‘capacity’.     

Input structure of the construction industry: a cross‐country analysis, 1968–90

During the past several decades, globalization has led to the integration of product markets. Rapid increases in cross‐border economic, social, technological and cultural exchange have become the key elements of knowledge diffusion and thus technology spillovers among countries. As a result, the debate as to whether absolute convergence occurs at the cross‐country level has increasingly attracted the attention of researchers. The aim of this study is to examine the changes in the input structure of the construction industry in nine developed countries between the late 1960s and 1990 and to evaluate whether convergence occurs at input industry level. The analysis of the technical coefficients for 35 industries reveals that, across countries and over time, not only the key inputs but also the new high and low input industries are similar. The estimation of variance factors on the other hand suggests that (1) during the sample period, the input structure of the industry is dominated by divergence rather than convergence; (2) among the input industries, services in particular tend for convergence; and (3) manufacturing inputs provide a mixed picture where only a few inputs show convergence and the remaining inputs show in general weak divergence.     

Cost overruns in public projects

The effects of cost overruns are not confined to the construction industry but are reflected in the state of the overall economy of a country. This is particularly so in Turkey, where construction investments account for almost half of all investments. A large number of Turkish public agencies and contractors were surveyed to identify the causes of such cost overruns in public projects undertaken in the decade 1970–1980. The results indicate that inflationary pressures, increases in material prices and workmen's wages, difficulties in obtaining materials at current official prices, construction delays and errors in first estimates were the most important sources for cost overruns.