An input-output analysis of the construction sector in emerging markets

Abstract

Construction is a major industry in fast growing countries and plays a leading role in the process of economic development. Using input-output tables, the performance of the construction sector in six emerging countries (Brazil, Russia, India, Indonesia, China and South Africa) is compared from 1995 to 2005. First, the construction performance in these developing economies, by using standard indicators based on value added, gross output, final demand and intermediate inputs, is investigated. Then, the similarity cosine index is introduced to assess structural change and differences in input expenditures between countries. This index is a useful tool for identifying input bundles that require a probing international comparison of construction performance.

Keywords:

• Construction cost
• input-output analysis
• international comparisons.

Acknowledgements

The authors would like to thank the reviewers and the editor for their constructive and useful comments. The usual caveat applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Bold capital letters are used for matrices, bold lower-case letters are used for vectors and italic lower-case letters for scalars. Transposition is indicated by a prime while is a diagonal matrix whose entries are given by vector p.

2. Data available at http://goo.gl/Rt3WdH.

3. In the first half of the 1990s GDP per capita was close to $30 000 in advanced economies such as Canada, France, Germany, Japan and to $37 000 in the USA.

4. The difference between Pearson’s correlation and Salton’s cosine is geometrically equivalent to a translation of the origin to the arithmetic mean values of the vectors. Covariance and Pearson correlation are invariant to shifts (correlation to scale effects too) and are not suitable for our analysis.