Civil Engineering Reference
In-Depth Information
Ozay Mehmet and Vedat Yorucu (2008) 'Explosive construction in a micro-
state: environmental limit and the Bon curve: evidence from North Cyprus',
Construction Management and Economics
26: 79-88
The shape of the Bon curve
Although the existence of the Bon curve
[see
Figure 1,
page 266] enjoys general
acceptance, its shape is not yet settled. The
exact nature of the construction-GDP
relationship is a matter of empirical question
and several questions of theory emerge
over stages and transformations, over and
above problems of statistics, sources and
methodology. Thus, some question the slope
of the Bon curve during the drive to, and
beyond the maturity stage. Accordingly, as
economies 'mature', construction activity
slows down and the declining portion of
the Bon curve becomes flatter, indicating
a declining importance of the construction
sector in the economy….
Structural transformation within the
construction sector
Within the aggregate relationship revealed
by the Bon curve, there are important
transformations because the construction
sector is a diverse sector, consisting of
residential, institutional, commercial,
industrial, infrastructure, maintenance
and other subdivisions. During the course
of economic development, the relative
significance of these construction sub-sectors
are altered in tandem with the Colin-Clark
hypothesis (Mehmet 1999: 96) that with
a rising GDP, the structure of the economy
changes from being agrarian to industrial
and then to service-based economic activity.
Pietroforte and Tangerined (1999), using
disaggregated Italian data for the 50 largest
construction firms, have demonstrated that
during the 1980s and 1990s these firms
have responded to changing industrial
policy to adapt a service orientation in
construction activity in order to remain
competitive. One finds Clark-type evidence
in earlier construction activity research as
well. Thus, Strassman (1970) argues that
the construction sector, like agriculture
or manufacturing, follows a pattern of
change that reflects a country's level
of development. After lagging in early
development, construction accelerates in
middle income countries and then falls off.
The extent of construction activity in an
economy is closely linked in particular to
the extent of urbanization in the economy.
The share of urban population increases
initially and then decreases as GDP per
capita rises.
Does size affect the Bon curve?
The importance of the size of an economy
has traditionally been ignored. Generally
smallness has been considered to be a
negative, limiting factor on economic
development….But this is misleading as
some of the most prosperous countries in
the world are micro-states, with less than
10,000 km sq, such as Singapore, Cyprus,
Trinidad and Tobago, Hong Kong, etc.
(Mehmet and Tahiroglu, 2002). At the same
time, however, construction activity may
be more volatile in micro-states. Thus one
major project coming to an end can have a
major impact on the aggregate data, whereas
in larger economies any single project will
only form a relatively small proportion of
total construction output. This may exhibit
greater short-term volatility than the large
countries. In any event, construction activity
in micro-states is an important topic in
its own right given the fact that some of
the wealthiest countries in the world are
micro-states….Accordingly, it is not an
idle question to inquire whether or not
construction in small states contradicts or
follows the shape of the Bon curve….
In Trinidad and Tobago Ramsaran
and Hosein (2006) found that construction
has become very much a leading sector
of the economy, manifesting a powerful
multiplier impact in both boom and bust
periods, growing at twice the GDP rate
and that the contribution of construction
to economic development was positively
correlated with the domestic resource
content of construction output. This is the
pattern observed in North Cyprus as well
(Yorucu and Keles, 2007) where small size is
encountering a critical ecological limit which
larger states may be better able to postpone.
