An international comparison of the association between construction industry development and urbanization

In recent years, the construction industry and urbanization in developing countries, particularly China, have entered a phase characterized by slowing growth rates and an increasing emphasis on sustainable development. This study examines construction industry development using data from China and four developed countries (the United Kingdom, the United States, Japan, and South Korea) covering the period 1970–2022. Employing the Granger causality test, this study first identifies the causal links among construction industry, population urbanization and economic development. It then conducts an international comparative analysis, employs panel threshold regression and panel fixed-effects models with interaction terms to reveal the characteristics of the non-linear relationship between construction industry and urbanization in the third stage of urbanization. The results indicate that when the urbanization ratio approaches 80 % and GDP per capita reaches US$30,000, construction industry development will likely to stagnate for a considerable period. Economic crises are identified as factors contributing to this stagnation, particularly in countries within the third stage of urbanization. Nevertheless, recovery remains possible, depending on the construction industry's ability to adapt growth strategies to evolving urban needs. The conclusions, supported by the quantitative evidence, provide policy implications for China and other developing countries.