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Construction and economic development: the case of Hong Kong

Author

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  • James Wong
  • Y. H. Chiang
  • Thomas Ng

Abstract

The role of construction in economic development is an important issue facing the construction research community, government and international development agencies. Based on empirical analyses, the complexities of the relationship between construction activity and stage of economic development in Hong Kong were examined. With time series data, Granger causality test results show that the construction output particularly the infrastructure sector drives the economic growth of Hong Kong, and not vice versa. Findings further indicate that the role of the local construction industry changes as the economy matures from newly industrializing country (NIC) to advanced industrialized country (AIC) status, as revealed by the diminishing rate of capacity addition by construction as well as the growing maintenance and repair sector. This complies with Bon's inverted U-shaped relationship between construction activity and gross domestic product (GDP). However, the proposition of 'volume follows share' is not supported since the indigenous construction investments still sustain for the service-oriented economy which inevitably needs commercial development and logistics infrastructure to provide the services. The results may be significant for policy makers in NICs, in the long run, to formulate corporate and industrial policies to chart out a viable and sustainable course to revive the vigour of the industry.

Suggested Citation

  • James Wong & Y. H. Chiang & Thomas Ng, 2008. "Construction and economic development: the case of Hong Kong," Construction Management and Economics, Taylor & Francis Journals, vol. 26(8), pages 815-826.
  • Handle: RePEc:taf:conmgt:v:26:y:2008:i:8:p:815-826 DOI: 10.1080/01446190802189927
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    References listed on IDEAS

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    Cited by:

    1. Erol, Isil & Unal, Umut, 2015. "Role of Construction Sector in Economic Growth: New Evidence from Turkey," MPRA Paper 68263, University Library of Munich, Germany.
    2. Akpan, Usenobong F. & Chuku, Agbai, 2011. "Economic Growth and Environmental Degradation in Nigeria: Beyond the Environmental Kuznets Curve," MPRA Paper 31241, University Library of Munich, Germany.
    3. Nyasha , Sheilla & Gwenhure, Yvonne & Odhiambo, Nicholas M, 2016. "Energy consumption and economic growth in Ethiopia: A dynamic causal linkage," Working Papers 20288, University of South Africa, Department of Economics.
    4. Saboori, Behnaz & Soleymani, Abdorreza, 2011. "Environmental Kuznets curve in Indonesia, the role of energy consumption and foreign trade," MPRA Paper 31534, University Library of Munich, Germany.

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