Structural analysis of inter-industrial linkages: an application to the Australian construction industry

Abstract

With the rapid growth in economic and technological development, the linkage of the construction industry with the economy has changed in the past decades, which may have generated corresponding changes in other industries. This study sheds new light on the measurement of structural changes in the inter-industrial linkages of an industry using the Leontief model and the Ghosh model based on the hypothetical extraction method. The Australian national input–output tables provided in the World Input–Output Database are employed as an empirical study exploring the influence of construction linkages on other industries’ production input and output. The results indicate that construction effects have become weaker in relation to promoting economic growth, although the mining and quarrying industry and some service industry activities demonstrate strong and positive backward and forward linkages with the construction industry in Australia. This research provides an approach for measuring corresponding changes in other industries caused by one industry’s inter-industrial changes.

Keywords:

• Construction industry
• Australia
• hypothetical extraction method
• input–output analysis
• inter-industrial linkages

Acknowledgements

The authors thank the editor and the anonymous referees for their insightful comments and valuable suggestions on an earlier version of the paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).