The global construction market: a cross-sectional analysis

Abstract

Construction is a major industry throughout the world accounting for a sizeable proportion of most countries gross domestic product (GDP). According to a recent survey, total world construction spending in 1998 was over $3 trillion. Furthermore the importance of the construction sector is related not only to its size but also to its role in economic development. This paper examines the extent of international construction activity, and is based on a cross-sectional analysis of published data pertaining to global construction spending. The principal findings suggest that the role of construction changes as economic development proceeds. It was found that the share of construction spending in GDP first grows during less developed country (LDC) status, peaks during newly industrializing country (NIC) status and then declines as countries move from NIC to advanced industrialized country (AIC) status. The research identifies the importance of construction within NICs. The regions of Asia and Latin America and the countries of China, Mexico, Argentina and Egypt are considered noteworthy in regard to various indicators concerned with construction and economic activity. However, the conclusion is that as economic development proceeds from NIC to AIC status construction fails to maintain its share of GDP and therefore declines in importance.