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- A model for construction sector development in middle-income sub-saharan african countriesPublication . Lopes, Jorge; Banaitienė, NerijaBuildings and other constructed facilities form the essential framework of a country's physical and economic infrastructure. Construction serves as a key capital input to production, driving economic growth and wealth generation. This impact can be particularly transformative in low -to -middle -income countries. Physical infrastructure, including construction, is a powerful engine of economic growth and is closely related to national economic performance. However, not all studies agree with the commonly held belief that construction investment has a positive impact on economic growth, particularly concerning the amount of investment and the relationship between construction investment and economic growth. So far, cross-country studies dealing with the construction sector -economic growth relationship have used indicators of national output and construction that are not strictly comparable between countries. This article reviews the main strands of the literature on the role that the construction sector plays in the national economy and economic development. It also uses novel data drawn from the "capital file" of the PENN World Table (version 10.1) to assess the development pattern of the construction sector in two groups of sub-Saharan African (SSA) countries on the middle -income status of economic development, for the period between 1990 and 2019. The study reveals that construction shares, measured as the proportion of gross fixed capital formation attributable to construction in the gross domestic product, revolve around a norm determined by the level of built assets preceding the reference period. The results of the study could have policy implications for the economic sustainability of the construction industry in SSA.
- Is there a causal relationship between construction activity and the portuguese economy? An econometric empirical applicationPublication . Nunes, Alcina; Lopes, Jorge; Balsa, CarlosIt has long been recognised that the role of the construction industry in a country’s national economy goes beyond its share in national output. Existing paradigms on the structural change of the construction industry as national economy develops over time have been evolving from an approach that stresses the role of construction investment (indeed physical capital) as an engine of economic growth to one where the pattern of the evolution of the industry should follow that of the general economy. Using time–series data drawn from the United Nations national accounts databases, this study applies an econometric methodology to assess the validity of the underlying propositions in Portugal. With the availability of long and reliable time-series data and the development of econometric methodology related to the study of economic relationships between variables a new set of studies has emerged. Indeed, making use of the most recent innovations in the literature of unit root tests, this paper uses the Granger causality methodology to investigate the relationship between construction activity, measured by the construction value added, and the Portuguese aggregate economy measured by its Gross Domestic Product (GDP). The issues of concern here are whether the construction sector and the aggregate economy are interdependent and whether construction activity contributes to economic growth and/or economic growth contributes to the dynamics of the construction industry activity. This kind of economic research has not been applied, until now, in Portugal. However, the results could be of particular importance for policy makers and economic agents since they might affect not only all macroeconomic policy but also the management activities at a microeconomic level. The results have shown that there is, in the short and medium-run, a uni-directional relationship between GDP and construction output in Portugal. On the other hand, the results do not show any significant effect of the construction growth on the GDP growth, at least in the short and medium run.
- The sustainability of the construction industry in sub-saharan Africa: some new evidence from recent dataPublication . Lopes, Jorge; Oliveira, Rui; Abreu, Maria IsabelThe relationship between a country’s level of construction activity and its stage of economic development has been the subject of study at the macroeconomic level for a number of years. The dominant paradigm in the field is that the construction industry follows an inverted U shaped development pattern i.e. the share of construction in national economy first increases in the early stages of development and ultimately decline in the latest stages of development. An examination of construction indicators in two categories of countries in Sub-Saharan Africa is made and the link between construction investment and the economic and social targets of the sustainable development goals is considered.
- Methodologies for estimating the built environment stock: an overviewPublication . Lopes, Jorge; Oliveira, Rui; Abreu, Maria IsabelThe role of the construction sector in the process of economic growth and development is well recognized in the literature. However, in the most advanced industrial economies, as well as emerging economies, the construction industry is no longer focused on providing a single service, i.e., a building or physical infrastructure, but on a variety of services and improvement of human and natural environments. Built capital stock is a major component of any country’s produced fixed capital as designated in the System of National Accounts (SNA) of the United Nations. According to several writers, the knowledge of reliable data of building and other construction assets of a specific country or region is a crucial element for the long-term management of these assets. This paper presents an overview of the Perpetual Inventory Method (PIM) used for estimating capital stock and some methodologic issues regarding the measures of construction investment and of built capital stock. Additionally, based on the results of an earlier work, estimates of the Cape Verde’s built capital stock for the year 2014 are presented. The level of the of the built capital stock of a specific country and its impact on the development pattern of the construction industry is a suggestion for further studies.
- Analysis of the causal relation between construction activity and the gross domestic product of two neighbouring economies : Portugal and SpainPublication . Nunes, Alcina; Lopes, Jorge; Balsa, CarlosIt has long been recognised that the role of the construction industry in a country’s national economy goes beyond its share in national output. Using time–series data drawn from the United Nations national accounts databases, this study applies the econometric Granger causality methodology to investigate the relationship between construction activity, measured by the construction value added, and the Gross Domestic Product (GDP) of two neighbouring economies – Portugal and Spain. In a comparison basis, the paper intends to identify the existence of a causal relation between the construction sector and each one of the aggregate economies. In particular, it tries to verify if the construction activity contributes to economic growth and/or economic growth contributes to the dynamics of the construction industry activity in these two countries. For both countries is find evidence that GDP growth leads the growth in the construction sector, in the short and medium-run. The opposite is not observed.
- The construction sector and economic growth in sub-Saharan Africa (revisited)Publication . Lopes, Jorge; Oliveira, Rui; Abreu, Maria IsabelThe relationship between a country’s level of construction activity and its stage of economic development has been the subject of study at the macroeconomic level for the last forty years or so. This study follows an earlier research that investigated the relationship between investment in construction and economic development in Sub-saharan Africa (SSA), and found that the share of construction in national economy follows an inverted U-shaped pattern of development. That is, it firstly increases in the early stages of development and ultimately tend to decline in the latest stages of economic development. The research is based on data acquired on 22 of the countries in SSA over the period 1990-2017 and the sample is split into two groups according to the proportion of the construction sector in total value added in the period 1990-1999. The results of the analysis of the development pattern of the construction industry in the two categories of countries tend to corroborate the results of the earlier work in what regards the evolutionary pattern of the middle-income economies in SSA.
- Is there a causal relation between construction activity and the Portuguese economy? An econometric empirical applicationPublication . Nunes, Alcina; Lopes, Jorge; Balsa, CarlosIt has long been recognised that the role of the construction industry in a country’s national economy goes beyond its share in national output. Existing paradigms on the structural change of the construction industry as national economy develops over time have been evolving from an approach that stresses the role of construction investment (indeed physical capital) as an engine of economic growth to one where the pattern of the evolution of the industry should follow that of the general economy. Using time–series data drawn from the United Nations national accounts databases, this study applies an econometric methodology to assess the validity of the underlying propositions in a high-income economy - Portugal - over the long period of 38 years. With the availability of long and reliable time-series data and the development of econometric methodology related to the study of economic relationships between variables a new set of studies has emerged. Indeed, making use of the most recent innovations in the literature of unit root tests, this paper uses the Granger causality methodology to investigate the relationship between construction activity, measured by the construction value added, and the Portuguese aggregate economy measured by its Gross Domestic Product (GDP). The issues of concern here are whether the construction sector and the aggregate economy are interdependent and whether construction activity contributes to economic growth and/or economic growth contributes to the dynamics of the construction industry activity. This kind of economic research has not been applied, until now, in Portugal. However, the results could be of particular importance for policy makers and economic agents since they might affect not only all macroeconomic policy but also the management activities at a microeconomic level. The results have shown that there is, in the short and medium-run, a uni-directional relationship between GDP and construction output in Portugal. On the other hand, the results do not show any significant effect of the construction growth on the GDP growth, at least in the short and medium run.
- The long-run relationship between the construction sector and the national economy in Cape VerdePublication . Lopes, Jorge; Nunes, Alcina; Balsa, CarlosThe relationship between a country’s level of activity in the construction industry and its stage of economic development is a complex one. Several studies over the last forty years, based mainly on cross sectional data, found a positive association between national income and several measures of the construction industry activity. Early studies were concerned with the role of the construction sector, as part of physical capital, in the promotion of economic growth and development. A dominant paradigm that later emerged is the ‘Bon curve’ or the inverted U-shaped pattern of development. More recent research, based on longitudinal analysis, has also pointed to the non-linear relationship between the share of construction in GDP and the level of income per capita. Using time-series data drawn from the United Nations, this study applies an econometric methodology to assess the validity of the underlying propositions in a low-middle income economy-Cape Verde – over the long period of 38 years. The findings are in line with the assumptions that in the upward growth trend in developing countries, the pattern of the construction industry tends to follow that of the general economy.
- Construction and economic growth in developing countries of Africa : evidence from data of the last thirty yearsPublication . Lopes, JorgeThe role of construction in economic growth and development has been addressed by various writers and international bodies, many of whom have focused in developing countries. The main aspect derived from a seminal work in this field (Bon, 1992) is that there is a changing development pattern of the construction industry based on the stage of development of a country’s economy. That is in the early stages of the economic development, the share of construction in gross domestic product (GDP) increases but ultimately decreases in industrially advanced countries. That finding was consistent with the classical approach in growth theory in which physical capital formation is the main engine of economic growth and development. Using most recent data spanning the last thirty years or so drawn from the United Nations (Yearbook of National Account Statistics: Main Aggregates and Detailed Tables) and World Bank publications (World Development Report and Africa Development Indicators), the results of the study corroborate, in the main, the assumptions of a previous work that posit that in the developing countries of Africa, the positive relationship between construction and the national economy concerns only a downturn economy, and an in an economic upward trend the pattern of the construction sector (measured as a share of value added in national output) tends to follow pari passu that of the rest of the economy.