Civil Engineering Reference
In-Depth Information
Reading 5
An important theme in
Part C
has been the idea that construction plays a leading
role in the process of national development and macroeconomic management. The
following two extracts analyse the shape of the Bon curve, which is derived by
plotting GDP per capita against expenditure on construction to show the importance
of this sector to economic growth. The first edited extract is based on the empirical
evidence from 39 countries, at different stages of development, during 1994-2000.
The authors adopt a clear and general approach to introduce and interrogate Bon's
theory. The second extract is slightly more advanced, in the sense that it seeks to
question the exact shape of the curve for smaller nation states, such as Hong Kong,
Singapore, and Trinidad and Tobago, and provides a case study approach that
focuses on data relating to Cyprus during 1998-2005. Some obvious questions are
suggested by studying these extracts. For example, does the data reflect the current
relationship between construction output and GDP in your country? In other
words, use recent construction data to clarify your understanding of the sector's
broader impacts on the current pace and direction of economic growth. What do
you think of the closing idea posed in the second extract that micro-states with
fragile ecosystems will inevitably experience sharper limits on construction growth
than larger scale economies? Finally, what are the implications of the dynamic
role of construction for macroeconomic management? In particular, consider the
importance of government policies designed to secure growth, maintain stable prices
and protect the environment.
Les Ruddock and Jorges Lopes (2006) 'The construction sector and economic
development: the Bon curve'
Construction Management and Economics
24: 717-23
Introduction
The relationship between a country's state of
development and the level of activity in the
construction sector is one, which has been
the subject of study at the macroeconomic
level for a number of years (Turin 1973;
World Bank 1984; Wells 1987; Bon 1990).
A major obstacle to such studies has
been the lack of appropriate information
on the sector, particularly in developing
countries….
Bon (1992) analysed the changing role
of the construction sector at various stages
of economic development and presented a
development pattern for the industry based
on the stage of development of a country's
economy. This notion is well-explained in
basic terms by Tan (2002: 593): “In low
income countries, construction output is
low. As industrialization proceeds, factories,
offices, infrastructure and houses are
required, and construction as a percentage
of gross domestic product reaches a peak in
middle income countries. It then tapers off as
the infrastructure becomes more developed
and housing shortages are less severe or are
eliminated.” An important aspect of the
proposition was that, in the early stages
of development, the share of construction
increases but ultimately declines, in relative
terms, in industrially advanced countries
- and even at some stage, the decline is not
only relative but also in absolute terms, that
is 'volume follows share'….
In Bon's 1992 paper, the link between
economic development and construction is
discussed; his basic premise is that the share
of construction in total output first goes
