Civil Engineering Reference
In-Depth Information
developed country, construction as a percentage of its GDP grew from 3.8 to 6.6
per cent. During the next decade as roadways, ports, rail networks, airports, power
stations, factories and houses were added to the capital stock, construction output
in China increased to 13 per cent of GDP. Once China has fully matured into a high
income economy, this phenomenal rate of construction growth would be expected to
subside, but given the country's scale and population this will not be the case for at
least another decade.
Following the logic of Bon's analysis (1992) and the subsequent body of
research that it triggered - see
Reading 5
and Choy (2011) for references -
development agencies and international bodies such as the World Bank and the
United Nations became more confident of the key role played by infrastructure in
the development of a poor country. They argued that poor countries find themselves
in a poverty trap and escaping that trap requires large investments on building basic
infrastructure (roads, electricity grids, ports, water and sanitation, accessible land
for affordable housing) and on environmental management (Foster and Briceno-
Garmendia 2009). In short, there is a high correlation between economic growth in
developing economies and construction activity.
The relationship between GDP and construction output is discussed further in
the three case studies in this chapter (see pages 233-7). However, we end this section
by entering some general caveats concerning the reliability of construction data. It
is difficult to obtain accurate data on the output of the construction sector for three
reasons. First, the construction industry comprises a very large number of small
geographically dispersed firms that undertake mainly small projects. This makes
compiling comprehensive data sets difficult for government agencies monitoring
the industry. Second, much of the work in construction is subcontracted and,
consequently, there is a risk of double counting; the construction statistics division
at the ONS does not seek output data from property developers as they are regarded
as the clients of the reporting contractors. Third, alongside the official activities
'put through the topics' and recorded in company accounts, there is a significant
informal economy - unofficial work carried out for cash in hand. (There is also the
associated conundrum of DIY.)
The most extreme examples of unreliable data seem to come from countries that
are the least developed or those in a stage of transition. Meikle (2011) goes as far
as to suggest that 'informal' construction could possibly represent the majority of
construction activity in some developing countries. He claims that in Africa typically
90 per cent or more of rural residential building and more than 50 per cent of
urban building is informal output. In the higher income OECD countries, informal
construction is also an issue, with some estimates valuing this activity at around
18 per cent of the officially recorded construction output (Jewell et al. 2005).
Construction output is difficult to measure as many small building firms are unlikely
to be able to (or want to) meet the bureaucratic demands of national accounting
systems. Data can be unreliable. Surveys might be completed on the basis of the
value of quotations for new orders, and these may be resubmitted later, possibly
at a lower price, creating a credibility gap in the data. There are also construction
businesses that fail to declare some or all of their work to avoid tax. Tax evasion
