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

Abstract

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.

Keywords:

• Construction sector
• input–output analysis
• backward linkage
• forward linkage
• Turkey