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

Abstract

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.