The construction sector and construction activities are considered one of the main sources of economic growth, development, and economic activities. The construction industry plays an important role in the economic uplift and development of the country.
Construction is one of the main pillars of a country’s economy. The developed construction industry, directly and indirectly, employs a large number of people from different industries and varying educational profiles. Read why construction is one of the most important industries and its impact on a country’s economy.
Construction, with a large contribution in terms of production and employment, can be classified as one of the largest industries in developed and developing countries. The role of the construction sector in the economy can be defined in terms of production. In 2016, total production in construction amounted to about 8.8 trillion dollars, which is an increase of 0.9 trillion compared to 2015.
Increasing employment
How construction affects employment. The construction sector is the main source of employment, as it is a labor-intensive industry. Whether it is the construction sector in developed or developing countries, construction contributes to reducing unemployment. Even highly developed European centers, such as Barcelona, are highly dependent on construction projects and the restoration of their own landmarks.
Globally, in developed countries, construction has a greater contribution to production than employment, while in underdeveloped countries it is the other way around.
The construction sector also has the potential to create jobs in other sectors of the economy, such as manufacturing, transport, trade, and financial services, thanks to its interconnections with other sectors.
The basis for the development of other industries
The construction industry also provides a basis on which other sectors can develop, by building the physical facilities needed to produce and distribute goods and services. It is also a great source for the growth of the processing industry.
Government contracts with the construction industry are developing infrastructure related to health, transportation, and the education sector. For the prosperity of any nation, the construction industry is of great importance.
Reducing the foreign trade deficit
A developed construction sector of a country can affect the reduction of the foreign trade deficit. Domestic construction companies used to have a huge engagement in the countries of North Africa. We can say that even today there are successful companies on the domestic market, such as the company Konstruktor Consulting, which, among other engineering and construction jobs, deals with the provision of consulting services in the country and abroad. Housing is one of the next focuses of the company, as well as the practice of students who can be a significant resource of the company in the future.
Indirectly, the cumulative effect of the development of this branch of industry and the reduction of the deficit we are talking about is achieved.
Infrastructure development
No country can prosper without the necessary infrastructure. When the territory is covered by a satisfactory road network, electricity, and water supply network, investors will have a greater incentive to invest in that area. The role of the construction industry is to build the necessary infrastructure.
The successful construction of buildings and infrastructure usually results in direct social and economic benefits resulting from their use. In real estate you sell or rent apartments, hotels offer temporary accommodation and related services, and along the highway – the government can get a special toll/tax fee for its use.
In cases of infrastructure development, the results are more indirect: the added value and benefits to society will manifest as soon as it is available for use, as companies can use the highway to ship their products quickly, and citizens can spend less time on the road or even pay less. for travel. As for social impact, it may depend on what is being built: obviously good influential constructions, such as schools or hospitals, but also others, which can be good for a certain part of society to the detriment of another (shopping center is an example of an imbalance in trade – if the city in which it is built does not have a great demand for commercial shops, then the existing traditional shops will suffer from the opening of a new shopping center).
Building bridges can be vital to the development of a region. The construction of roads, railways, and airports creates conditions for the transport of goods, passengers, and information…
Activation of the financial sector
Construction projects can take years and require significant financial resources. Investors can obtain funds from various sources, including commercial banks. Due to the large number of people involved in the project, the money that will be invested in the project itself will circulate at all levels. From the payment of the architect to the auxiliary workers engaged in cleaning the construction site.
Numerous studies have proven the impact that the construction industry has on the overall economy, and here we have provided a brief insight into how construction affects the development of the economy.