Economic assessment of the construction industry: A construction-economics nexus

The purpose of this study was to conduct an economic assessment of the construction industry. More specifically, this study addresses ambiguities within the literature that are associated with the construction-economics nexus. The researcher 1) investigated the relationships between economic indicators and stock prices of U.S. construction equipment manufacturers, 2) investigated the relationships between energy production, consumption, and corruption, and 3) determined the economic effect electricity generation and electricity consumption has on economies of scale. The researcher used descriptive and inferential statistics in this study and determined that economists, researchers, policy-makers, and others should have predicted the 2007-08 world economic collapse 5-6 years prior to realization of the event given that construction indices and GDP grossly regressed from statistically acceptable trends as early as 2002 and perhaps 2000. Substantiating this claim, the effect of the cost of construction materials and labor, i.e. construction index, on GDP was significant for years leading up to the collapse (1970-2007). Additionally, it was determined that energy production and consumption are predictors of governmental corruption in some countries. In the Republic of Botswana, for example, the researcher determined that energy production and consumption statistically jointly effected governmental corruption. In addition to determining statistical effect, a model for predicting governmental corruption was developed based on energy production and consumption volumes. Also, the researcher found that electricity generation in the 25 largest world economies had a statistically significant effect on GDP. Electricity consumption also had an effect on GDP, as well, but not on other economic indicators. More importantly than the quantitative findings, the researcher concluded that the construction-economics nexus is far more complex than most policy-makers realize. As such, infrastructure spending may, or may not, be an answer to the current world economic collapse, as much more research remains to be completed by researchers to address known ambiguities within various associated findings. Until a collective agreement can be reached among researchers as to the effect that construction spending has on economic output under known, specific parameters, policy-makers should exercise extreme caution when leveraging infrastructure spending as a solution for overcoming the world economic collapse.