Backward linkages from construction. Exploring the economic development potential of Scottish building supplies

Abstract

One argument for increasing construction investment is the number of jobs and related multipliers associated with property investment. However, economic activity does not begin and end with actual construction: there are important backward linkages into the input markets for construction. If these markets can be shown to be primarily indigenous or at least with the potential to be locally‐based, then there are wider local and regional benefits that may accrue from construction programmes. This paper is based on recent Scottish research which traced back the linkages from construction to specific building supplies markets in materials, semi‐finished and finished products. Strong economy‐wide multiplier effects are identified for construction output, for those on low incomes and in terms of job creation. Scottish construction is found to be primarily self‐contained with consequent opportunities to maximise the local economic impact of construction work. The research suggests that policies need to target specific supply industries, meet the skills shortage challenge and confront the problems associated with construction tendering.