Importance of Construction Industry

Given below are some factors that clearly highlight the importance of the construction industry:

Influence on Human Development

Construction is the most pervasive factor in our Life. There is no aspect of human life and civilization, upon which the construction does not have a profound influence, not only spanning physical spaces but also spanning hearts, by bringing people together in their social, cultural, political, recreational, and economic endeavors.

It envelops a very large canvas of human activities, from huts to skyscrapers, from cart routes to super-express highways, from culverts to multi-span multilane flyovers, from village shops to supermarkets and large industrial complexes, refineries and fertilizer's plants, from observation posts in the high Himalayas to off-shore drilling platforms in deep seas.

Impact on the Economy

One major sector of the economy which is receiving increasing attention as a possible area for the development of better institutional structure in the emerging nations is construction, an industry present in every developmental activity. Construction contributes to economic development by satisfying some of the basic objectives of development including output generation, employment creation, and income generation, and re-distribution. It also plays a major role in satisfying basic physical and social needs, including the production of shelter, infrastructure, and consumer goods.

A major objective of development is economic growth. During the early developmental process economic growth seems to be generally high, and construction, along with manufacturing, tends to play an increasingly important role in the economy while agriculture's importance declines; once a relatively high level of development is achieved, however, economic growth appears to slow, and construction's role tends to stabilize or even decline slightly while the other sectors continue as before. The Construction Industry is an investment-led sector where the government shows high interest.

While construction's direct contributions to development are significant, it also stimulates a sizeable amount of economic growth through backward and forward linkages. Construction's requirements for goods and services from other industries are considerable; the development of the construction industry therefore stimulates these ancillary industries, thus encouraging further economic growth. In developing countries, the construction of physical facilities makes up more than one half of gross domestic investment and tends to be concentrated on basic infrastructure in agriculture, mining, transportation, communication, and utilities. Infrastructural services make some contribution to GDP, but they also stimulate the development of other industries which, in turn, contribute more directly to economic growth.

Construction plays a pivotal role in the growth of the economy as a basic infrastructure facility. The health of the economy is often gauged by monitoring new home construction starts as an indicator of consumer confidence. An increase in the level of construction activity will increase the GDP and have a positive influence on employment, and public income.

Any budgetary squeeze on construction will reduce the construction activity and after a time lag, reflect with decreased GDP and slowing down the economic growth. Any change in the level of construction output will have a great corresponding effect on the country's economy as a whole.

Throughout the world, construction is a leading industry in all market economies. It is the first indicator of the health of the economy. Its acceleration starts a buoyant economic growth and vice-versa. Korea, Taiwan, and Hong Kong have used the construction sector to lift themselves into vibrant economics. Malaysia and China are using the same strategy, by rebuilding their cities and highways, etc. to become major players in the global economy. According to the U.S. Census, spending on construction projects totaled more than $993 billion in 2014.

Nowadays, throughout the world, construction has become a leading industry in all market economies. The construction industry accounts for more than 10% of global GDP (6-9% in developed countries) and employs around 7% of the global workforce (around 273m+ people). The output of the global construction industry was worth an estimated $10.8 trillion in 2017.