Factors And Impacts Of The Construction Industry In Developing Countries

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The economies of many developing countries are currently confronted by severe difficulties owing to a combination of lower commodity prices, higher energy costs, falling exchange rates and rising inflation. At the same time, the countries face immense social problems (including a rising urban population and unemployment) which are putting pressure on the nation’s resources and capabilities. The construction industry in a typical developing country is facing reduced levels of demand as a result of adjustment programmes which invariably involve cuts in governments’ capital investment. The challenge, as Ofori (1993) suggests, is that the construction industry should do well despite the severe constraints in its operating environment.

There is a growing awareness among developing countries about the significance of infrastructure supply and capacity building in construction for socio-economic development in general, and for the effective implementation of poverty reduction initiatives, in particular.

Consequently, developing countries have for some years now been investing about 4 percent of their GDP in the provision of infrastructure (World Bank 1994).

The construction industry is one of the most important components of any developing country’s economic development, being a major contributor to the national economy and providing employment opportunities. There is no doubt that construction is a key activity within any