Construction industry development and government policy

Abstract

Recent researches for the economic causality relationships of infrastructure and building construction activities have produced mixed results. The general consensus is that different types of construction activity have different causality relationships with the economic growth. Some of them are economic "growth-initiating", whilst others are economic "growth-dependent". But, when it comes to identifying the "growth-initiating" construction activity and the "growth-initiating" one there is no agreement. There is no research done showing the causality relationships categorically. This research establishes the intrinsic causality relationships of the detailed End-Use construction activities and the economic growth of Hong Kong for the period 1983 - 2002 by using Granger Causality Test method. It provides convincing proof that different types of infrastructure and building construction activities play different intrinsic economic roles. In particular, residential building and transport infrastructure construction activities of Hong Kong exhibited strong intrinsic economic growth-initiating character. This research also confirms the short-term role of transport infrastructure construction activity of Hong Kong is subject to change by the planning and implementation processes of its construction programmes. By manipulating the construction programmes, Hong Kong government has made transport infrastructure construction activity to play different social, economical and political roles at different period of time. Such manipulation of the implementation programme also led to many deleterious effects in the construction industry, nullifying its economic contribution and causing great damages to the industry and the society. The research of this research suggests that a government has to take into consideration the different intrinsic role of each type of construction activities when formulating and implementing any development policies so that it could make the construction industry to contribute most to the society. It suggests a coherent development policy for the construction industry would strengthen the industry in handling the fluctuating workload and in managing the deleterious effects. It also suggests the Construction Industry Council can become Hong Kong's important institutional capacity and a surrogate for the government's development policy for the construction industry.