International investment in the construction industry

Over the past ten years the international construction industry has become characterised by fierce competition as contractors have entered the industry from the less developed regions of the world in search of hard currency, and workloads have dropped in the major regional markets. As a consequence the environment in the industry has changed so that the international contractor in the 1980's faces a complex competitive situation in which success only partially depends upon price competition, and increasingly reflects the need for other factors that differentiates the contractor's product from all others. By integrating an economic assessment of the international construction industry with elements of the theoretical framework of international investment and production, the objective of the research outlined in this thesis is to outline and justify the motives and methods of overseas operations of the international contractor. This has been carried out for both the individual contracting enterprise and the major nationality groups in the industry (UK, USA, Japan, South Korea, France, Germany, Italy, and Turkey). Much of the empirical analysis comes from a questionnaire survey carried out on twenty major international construction companies with offices in the UK, although it also relies on government publications of the respective countries and information from trade magazines for the macro analysis of markets and competitors in the industry. The combination of the theoretical predictions and empirical study provide interesting results both for economic theory and for the contractor working in the industry, that involves outlining the major competitive features of the industry in relation to the contractor's organisational hierarchy and the markets in which firms operate. Above all the analysis tends to suggest that the theoretical framework is a useful tool for investigation of the industry, and that project financing arrangements and home government support for contractors are major determinants of success in the industry. The thesis recommends that contractors need to assess their overseas interests as part of a globally coordinated strategy if they are to remain competitive in the next 5 - 10 years.